Kiwi dollar lifts after Oz quells talk of rate rise

The New Zealand dollar is heading for a 1 per cent weekly gain against the greenback and moved higher against the Aussie after that nation’s central bank quelled the view that rate hikes might be on the horizon, while New Zealand’s Finance Minister said the economy is performing well with the dollar at its current level.

The kiwi was trading at US74.22c at 5pm yesterday from US74.05c at 8am and US73.45c last Friday and was at A94.00c at 5pm from A92.51c late on Thursday and A93.75c a week ago.

The Australian dollar lost ground when Reserve Bank of Australia deputy governor Guy Debelle underscored “the fact that other central banks increase their policy rates does not automatically mean that the policy rate here needs to increase” and talked down the Aussie dollar, in a speech published on the central bank’s website. The Aussie spiked higher this week in the wake of RBA minutes that led to speculation the Australian central bank might move to lift rates sooner than anticipated.

Finance Minister Steven Joyce said in a Bloomberg interview that he didn’t have an opinion on the exact rate of the NZ dollar, but “I am just saying that the New Zealand economy and New Zealand businesses are performing very well at these current levels”.

“Joyce came out and said he’s not worried about the currency and the Aussie Government came out and said the opposite,” said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

The kiwi traded at 63.81 euro cents from 63.80 cents and advanced to 83.07 yen from 82.25 yen. It traded at 57.22 British pence from 56.40 pence and gained to 5.0210 yuan from 4.9681 yuan. The trade- weighted index rose to 78.59 from 77.82 on Thursday.

New Zealand’s two- year swap rate fell 2 basis points to 2.21 while the 10- year swaps fell 5 basis points to 3.26 per cent.