NZ dollar reaches nine-month high
Thu, 13 Dec 2012 9:06a.m.
The New Zealand dollar rose to a new nine-month high after the Federal Reserve extended its quantitative easing programme and tied the end of record low interest rates to a targeted drop in unemployment.
The kiwi dollar rose to 84.51 US cents from 83.90 cents at 5pm yesterday, the highest since it reached 84.71 cents on February 29.
The trade-weighted index rose to 75.30 from 74.91.
The Fed will buy Treasuries outright at a rate of $US45 billion a month, alongside $US40b a month of mortgage-backed securities, according to a Fed statement following a two-day meeting of policy makers.
It will keep the target range for the federal funds rate at zero to 0.25 percent as long as the unemployment rate remains above 6.5 percent and inflation "between one and two years ahead is projected to be no more than" 2.5 percent.
The US jobless rate is now 7.9 percent.
"What has really got the market going is the thresholds for the lower rate commitment," said Imre Speizer, strategist at Westpac Banking Corp.
If the jobless rate is slow to come down, rates would stay low for longer than the market expected.
The kiwi dollar rose to 79.88 Australian cents from 79.69 cents yesterday and climbed to 70.29 yen from 69.32 yen. It was at 64.54 euro cents from 64.50 cents.
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