NZ dollar hits four-month high as Trump raises US tariffs

The New Zealand dollar rose to a four-month high as US President Donald Trump raised tariffs on imports of washing machines and solar panels, raising fears about the White House's protectionist attitude.

The kiwi dollar climbed as high as 73.64USc and traded at 73.43USc at 8am in Wellington from 73.22USc yesterday. The trade-weighted index gained to 75.39 from 75.21 yesterday.

The Dollar Index, a measure of the greenback against a basket of currencies, fell 0.2% after US Trade Representative Robert Lighthizer announced plans to impose a new 30% tariff on imported solar panels and tariffs of up to 50% on residential washing machines. The announcement comes as the US, Mexico and Canada prepare for the latest round of renegotiations on the North American Free Trade Agreement. Trump has advocated tilting trade relationships in favour of the US, raising fears a growing tide of protectionist policies could weigh on global trade.

"While President Trump had pledged to get tough with America's trade competitors during the election campaign, the move yesterday was the first time he had directly signed off on increased tariffs in his time in office," Bank of New Zealand interest rate strategist Nick Smyth said in a note. "The US dollar is generally weaker again, with Trump's imposition of tariffs seemingly the latest excuse to sell the dollar."

Still, equity markets were largely unfazed by the tariff announcement with stocks on Wall Street gaining on the strength of corporate earnings, while commodity prices gained with Brent crude oil up 1.3% to US$69.90 a barrel.

Local data today include credit card spending and balances for December.

The kiwi was little changed at 81.04 yen from 81.10 yen yesterday after Japan's currency rallied on a shift in the Bank of Japan's language on inflation expectations, which it viewed as stable rather than falling.

The local currency rose to 91.90Ac from 91.66Ac yesterday and gained to 4.6995 Chinese yuan from 4.6842 yuan. It increased to 52.51 British pence from 52.36 pence yesterday and traded at 59.79 euro cents from 59.73 cents.

(BusinessDesk)