NZ dollar gains as emerging markets recover; Syrian intervention, month-end loom
By Paul McBeth
Aug. 29 (BusinessDesk) - The New Zealand dollar rose in local trading as stock markets in emerging nations recovered
after a sharp sell-off and ahead of likely Western military intervention in Syria and the squaring up of month-end
positions on Friday.
The kiwi rose to 78.34 US cents at 5pm in Wellington from 77.90 cents at 8am and 77.58 cents yesterday. The
trade-weighted index advanced to 74.01 from 73.33 yesterday.
Stock markets in India and Indonesia rose in afternoon trading after the biggest sell-off in South East Asian shares in
12 years amid fears developing economies are slowing down. That took the sting out of a return to safe-haven assets amid
an increasing likelihood of a military strike on Syria for using chemical weapons on civilians.
“There’s a bit of relief in emerging markets today,” said Tim Kelleher, head of institutional FX sales NZ at ASB
Institutional in Auckland. “The emerging markets stuff is a negative for the kiwi, and so is the Syrian stuff.”
Kelleher said the currency will find sellers at between 79 US cents and 79.50 cents, and he expects global investors
will sell down commodity currencies at the month-end repositioning on Friday on the growing prospects Larry Summers will
get the top job at the Federal Reserve.
“Larry Summers is more likely to raise rates earlier, so he should be a positive for the US dollar,” he said.
New Zealand business confidence slipped from a 14-year high this month, though remained at an elevated level, according
to an ANZ survey.
The release of New Zealand building consents for July tomorrow will provide another update on the pace of the Canterbury
rebuild, which will underpin much of the country’s growth in the coming years.
Australian government figures showed capital spending rose 4 percent across the Tasman as stronger investment in mining
offset weaker manufacturing. The result beat estimates. The kiwi advanced to 87.27 Australian cents at 5pm in Wellington
from 87.09 cents yesterday.
The local currency gained to 76.57 yen from 75.32 yen yesterday, and rose to 58.80 euro cents from 57.98 cents. It
increased to 50.43 British pence from 49.99 pence yesterday.
(BusinessDesk)