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New Zealand dollar hits two-week high

New Zealand dollar hits two-week high

WELLINGTON: The New Zealand dollar has risen to a two-week high, lifted by widespread selling of the US dollar and the biggest rally in the value of the Chinese yuan in a year. The kiwi gained to US69.89 cents at 5pm in Wellington on Thursday from US69.56c at 8am and US69.02c this time on Wednesday. The trade-weighted index increased to 77.59 from 77.13 on Wednesday. The greenback had been trading at 14-year highs off the back of Donald Trump’s victory in the US presidential election.

Minutes published overnight by the US Federal Reserve suggested members believed three rate hikes would be needed in 2017 in response to the incoming President’s aggressive stimulus and infrastructure projects, which are expected to stoke inflation. Tim Kelleher, head of institutional foreign exchange sales at ASB Bank in Auckland, said Asian currencies had all benefited from a large-scale sell-off of the US dollar. “It’s been quite volatile today; the biggest thing has been the offshore move on the yuan which has seen the biggest rally in a year that’s fed through to the Asian currencies including the kiwi,” he said. “The People’s Bank of China has clearly come in and told state-backed companies to sell US dollars, and there’s been selling of US dollars across the board in Asia.” Mr Kelleher said he believed an interim low in the value of the kiwi had now passed.

The New Zealand dollar broke below the US70c mark during the middle of December, having spent most of the last six months of 2016 trading within a range of US70c to US74c. The kiwi gained slightly against its trans-Tasman counterpart, rising to A95.81c from A95.34c on Wednesday. Against the Chinese yuan, the New Zealand dollar rose slightly to 4.8406 yuan from 4.8004 yuan a day earlier. It gained slightly against the euro, rising to 66.42 euro cents from 66.32 euro cents. It also appreciated against the British pound, rising to 56.70 pence from 56.36 pence. The kiwi fell slightly against the Japanese yen, dropping to 81.38 yen from 81.46 yen.