NZ dollar reaches five-month high
Tue, 18 Sep 2012 6:08p.m.
By Paul McBeth
The New Zealand dollar climbed to a five-month high against its Australian counterpart after minutes from this month's Reserve Bank of Australia policy meeting show the central bank is wary about the strength of its currency.
The kiwi rose as high as 79.12 Australian cents, the highest level since April 24, and traded at 79 cents from 78.63 cents on Monday. It rose to 82.71 US cents at 5pm in Wellington from 82.57 cents at 8am, little changed from 82.74 cents on Monday.
The RBA minutes showed the board was happy for rates to be slightly below average with low inflation and a weak global growth outlook.
The board "discussed the possibility that the high level of the exchange rate was weighing more heavily on the economy than might be expected" and noted a softer economy across Asia "as weaker conditions in China and major developed countries had weighed on exports from the region," the minutes said.
That comes ahead of New Zealand data that's expected to show the local current account deficit widened in the second quarter, and local economic growth slowed in the same period.
"There was nothing really in the minutes to get worried about, that wasn't in the earlier statement that came with the announcement," said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney.
"The kiwi might give up the outperformance that we've had over the first two days of the week in the second two days" with the release of the local figures, he said.
Stock markets fell across the globe as investors paused to consider the impact of the Federal Reserve's programmed to buy unlimited mortgage-backed securities, announced last week.
The New Zealand dollar edged up to 63.13 euro cents from 63.01 cents on Monday, and slipped to 50.89 British pence from 51.01 pence. It rose to 65.01 yen from 64.81 yen on Monday, and advanced to 73.23 on a trade-weighted basis from 73.08.
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