NZ dollar gains as high yields draw demand
Fri, 13 Jul 2012 5:53p.m.
The New Zealand dollar rose in local trading as investors looked for assets that are still making positive returns in the face of slowing Asian economies.
The kiwi rose to 79.19 US cents at 5pm from 79.01 cents at 8am, and was down from 79.31 cents.
The trade-weighted index was little changed at 72.17 from 72.21.
Gross domestic product in China expanded 7.6 per cent in the three months ended June 30 from a year earlier, according to the National Bureau of Statistics.
That was in line with market expectations of 7.7 per cent growth, slowing from an 8.1 per cent pace in the first quarter.
The figures followed an unexpected contraction in Singapore, where GDP fell an annualised 1.1 per cent, and a surprise rate cut from the Bank of Korea.
"You've got six countries in Europe with negative bond yields, our yields are positive - where else are you going to put your cash," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional in Auckland.
"There's definitely the case of that going on with the data quite weak out of Asia.
The kiwi fell to 5.0460 yuan from 5.0503 yuan and rose to 1.0053 Singapore dollars from 1.0045 dollars.
It gained to 910.58 Korean won from 910.14 won, and slipped to 62.76 yen from 63 yen.
Investor sentiment was dented earlier in the day when Moody's Investors Service cut Italy's government bond rating two notices to Baa2 from A3, and left it on a negative outlook, citing the threat of contagion in the eurozone.
The yield on Italy's benchmark 10-year government bond was little changed at 5.9 per cent.
The New Zealand dollar rose to 51.29 British pence from 51.12 pence and crept up to 64.85 euro cents from 64.75 cents.
It was little changed at 77.86 Australian cents from 77.79 cents.
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