Kiwi dollar hits record trade-weighted high

The New Zealand dollar has advanced to an all-time high on its trade-weighted index after disappointing growth data eroded support for the US dollar but dealers are wondering if the Reserve Bank of New Zealand will move to knock the kiwi lower.

 
 

Flying DollarThe kiwi TWI was 81.42 at 5pm, up from 80.80 on Wednesrday and surpassing the 81.29 record it reached earlier in June.

The NZ dollar firmed to 87.56 US cents at 5pm in Wellington from 87.28 US cents at 8am and 86.78 cents at 5pm on Wednesday.

The US dollar fell after a report showed the US economy shrank at a 2.9 per cent annual rate in the first quarter, instead of the one per cent pace reported previously, the largest revision since the series began in 1976.

Meanwhile, a separate report showed orders for long-lasting US manufactured goods unexpectedly declined one per cent in May.

“Overall we’ve seen a general weakness in the US dollar stir buying in the kiwi. Investors are feeling a little bit more confident that the US aren’t going to start raising interest rates as early as some were expecting, which was still next year,” said Dan Bell, head of corporate sales at HiFX in Auckland.

Mr Bell said the kiwi had broken through a key level at 87.50 US cents.

The RBNZ governor had talked about the potential for intervention about that level.

“In a way he’s prepared the market for that so I think if it was to keep going at the pace it is at the moment it wouldn’t surprise me to see the RBNZ come out with some comments or potentially start selling into it,” he said.

The kiwi advanced to 93.16 Australian cents from 92.68 cents on Wednesday, to 64.25 euro cents from 63.76 cents and to 89.12 yen from 88.42 yen.

Satirical Toon by Mark Winter, an award-winning New Zealand cartoonist, designer and film maker and his pen name, Chicane, signifies a deceptive bend. He is currently living in London.  Mark is always available to take commissions for artwork, caricature, cartoons or illustration projects. If you would like to discuss this further please get in touch on Twitter (@ChicanePictures) or at www.chicanepictures.com  

 
 

 
[vivafbcomment]