Dollar advances as investors take a breather from rapid decline
Kiwi advanced to 68.86 US cents at 8am in Wellington.
The New Zealand dollar gained as investors deemed its recent decline had gone too far, too fast.
The kiwi advanced to 68.86 US cents at 8am in Wellington, from 68.53 cents at 5pm yesterday. The trade-weighted index rose to 71.98 from 71.61 yesterday.
The local currency has dropped 9.5 percent against the US dollar since the start of May as traders price in lower New Zealand interest rates as the economy slows, while an improving US outlook stokes expectations for higher interest rates in that market.
"There was a growing feeling that maybe it has gone too far too fast, even though the longer-term trend does remain downward," said Peter Cavanaugh, an adviser at Bancorp Treasury Services. "It just seems to be one of these normal corrective phases that it has to go through to solidify the trend."
Traders who had bet on the kiwi currency's decline may be taking profits in a quiet data week, some analysts said.
This afternoon, the Reserve Bank will release data on high-debt mortgage lending for May.
The New Zealand dollar advanced to 61.50 euro cents from 61.32 cents yesterday as Greece's negotiations with its creditors remain unresolved as the deadline for a 1.6 billion euro payment to the International Monetary Fund looms next week.
The local currency rose to 89.37 Australian cents from 88.80 cents yesterday after an International Monetary Fund official visiting Australia told media Australia needs to get used to a lower pace of growth. Australia will never again return to the trend rate of economic growth of around 3.25 per cent it has enjoyed for the last few decades. Four or five years down the track, Australia's trend rate of economic growth will be more like 2.5 per cent, James Daniel, the IMF's assistant director for Asia and the Pacific told The Age newspaper.
The kiwi gained to 43.86 British pence from 43.54 pence yesterday and increased to 85.28 yen from 85 yen.
(BusinessDesk)
Tina Morrison
Thu, 25 Jun 2015
Thu, 25 Jun 2015
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Dollar advances as investors take a breather from rapid decline
48943