NZ dollar exceeds 71 US cts on Abu Dhabi support

NZ dollar climbs above 71 US cts as Abu Dhabi moves to prop up Dubai

By Paul McBeth

Nov. 30 (BusinessWire) – The New Zealand dollar climbed above 71 U.S. cents after Abu Dhabi signalled it will offer some support to its neighbour Dubai, which shocked markets after it sought to push out repayments on its debt.

An Abu Dhabi official was reported by Reuters as saying the capital of the United Arab Emirates “will look at Dubai’s commitments and approach them on a case-by-case basis.” Stocks in Europe pared losses after concerns about Dubai eased, with the Dow Jones Stoxx 600 climbing 1.2%. The kiwi dollar climbed from below 71 U.S. cents after Japan’s Finance Minister Hirohisa Fujii stoked speculation he may intervene in foreign exchange markets by raising the prospect of the Group of Seven nations issuing a joint statement on currencies.

“On the Dubai front, everybody’s waiting to see what Abu Dhabi will do – the extent of their additional support is still up in the air,” said Mike Jones, strategist at Bank of New Zealand. “The kiwi surged back around 71 U.S. cents after talk of a Japanese intervention, which saw the yen come off its highs.”

The kiwi climbed to 71.51 U.S. cents from 70.47 cents on Friday in New York and advanced to 63.58 on the trade-weighted index, or TWI, a measure of the currency against a basket of five trading partners, from 63.01. It surged to 62.22 yen from 60.85 yen last week, and slipped to 78.48 Australian cents from 78.54 cents. It rose to 47.61 euro cents from 47.39 cents on Friday, and was little changed at 43.03 pence from 43.11 pence.

Jones said the currency may trade between 70.70 U.S. cents and 72.10 cents as Asian equity markets determine the extent of Europe and America’s exposure to investment company Dubai World, which has some US$59 billion of liabilities. He doubts month-end positioning will have much impact on the kiwi dollar today.

New building permits in New Zealand are expected to continue their recovery when official data is released today. Construction slumped when the economy fell into its longest recession since the 1970s, but has steadily improved as the property market, underpinned by a net inflow of migrants and returning expatriates, supported the recovery.

(BusinessWire)

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