NZ dollar tempers gains on RBNZ after S links slowing Australian economy to mining
By Paul McBeth
Jan. 31 (BusinessDesk) - The New Zealand dollar pared gains from a more optimistic Reserve Bank review today after
rating agency Standard & Poor's joined the dots between a slowing Australian economy and the possible peak of the nation's mining boom.
The kiwi dollar rose to 83.47 US cents at 5pm in Wellington from 83.11 cents just before the RBNZ announcement, but was
down from as high as 83.67 cents today and 83.71 yesterday. The kiwi climbed to 80.31 Australian cents from 79.94 cents
yesterday.
Central bank governor Graeme Wheeler held the official cash rate at 2.5 percent as expected, flagging a recovery in New
Zealand's economy over the coming year and a reduction in spare capacity which will increase inflation. The local
currency rallied on the news, even after Wheeler called it overvalued and Reserve Bank figures showed the bank had
started selling down its New Zealand dollar holdings.
"The statement was more hawkish than many were expecting - reading between the lines the bank is pretty happy with the
recovery playing out," said Mike Jones, currency strategist at Bank of New Zealand."
Those gains were tempered by a drop in the Australian dollar after Standard & Poor's said the slowing resources sector across the Tasman was weighing on the 'lucky country's' economy. The
Australian dollar dropped to US$1.0389 at 5pm in Wellington from US$1.0467 yesterday.
"S came out and said the obvious really," said Joe Capurso, currency strategist at Commonwealth Bank of Australia in
Sydney. "That goes to show how much of a slow day it is."
Markets will be watching US employment numbers tomorrow after figures showed growth unexpectedly stalled in the world's
biggest economy in the last three months of 2011.
The kiwi fell to 75.87 yen at 5pm in Wellington from 76.04 yen yesterday, and increased to 61.50 euro cents from 61.29
cents. It fell to 52.80 British pence from 53.13 pence yesterday.
The trade-weighted index declined to 75.06 from 75.29.
(BusinessDesk)