Kiwi gains amid Ukraine tensions

The New Zealand dollar has risen as investors keep tabs on the tensions between Russia and Ukraine and their possible spillover into broader markets.

 
 

The kiwi increased to 85.53 US cents at 5pm in Wellington from 85.39 cents at 8am and 85.37 cents on Monday. The trade-weighted index was 79.90 from 79.95 on Monday.

The leaders of the world’s seven leading industrialised nations, known as the G7, have been meeting in The Hague to discuss possible sanctions against Russia, which annexed the Crimean Peninsula this month while saying it won’t make any land-grabs against Ukraine.

Geo-political tensions have occupied investors, with a small flow of hard economic data this week.

“What would directly affect us would be an escalation in the situation in Russia and Ukraine, but at this moment in time it doesn’t appear to be happening and I would expect risk to come on,” said Stuart Ive, senior client adviser at OMF in Wellington.

“The kiwi may creep a little higher this week, but that’s very subject to any further developments from Russia.”

New Zealand’s economic prospects and bias to rising interest rates make the kiwi an attractive prospect for investors seeking a higher yield.

Mr Ive said he wouldn’t expect major institutions to shift their asset allocations away from the local currency when they reset the weightings at the end of quarter on Monday.

“The kiwi economy continues to march on and many people point out it’s basically the sweet spot,” he said.

The kiwi fell to 93.55 Australian cents at 5pm in Wellington from 93.97 cents on Monday.

It traded at 87.44 yen from 87.43 yen and rose to 61.83 euro cents from 61.70 cents.

 
 

 
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