NZ dollar climbs above 66 US cts as calmer markets stoke demand for risk-sensitive assets
By Paul McBeth
Oct. 8 (BusinessDesk) - The New Zealand dollar rose above 66 US cents for the first time in 6 1/2 weeks as reduced
volatility in global markets stoked investors' appetite for risk-sensitive assets, pushing up equities and
commodity-linked currencies.
The kiwi rose to 66.05 US cents at 8am in Wellington form 65.88 cents yesterday. The trade-weighted index was little
changed at 71.15 from 71.17 yesterday.
The Chicago Board Options Exchange's Volatility Index, known as Wall Street's 'fear gauge', fell to its lowest level in
seven weeks as investors assess the pace and timing of higher US interest rates, and have fewer qualms about the
strength of emerging market economies. That's helped push up equity markets, with stocks on Wall Street and Europe
gaining in the Northern Hemisphere trading session, while rising dairy prices have allayed fears about the strength of
New Zealand's economy, paring bets on another rate cut and stoking demand for the kiwi.
"Broad stabilisation in risk appetite, combined with a less gloomy outlook for the NZ dairy sector, appears to have
extended recent upward momentum," said Kymberly Martin, senior market strategist at Bank of New Zealand in Wellington.
"This has likely taken the market by surprise, given recent data showed the speculative community maintained NZD ‘short’
positions, despite no longer being at extremes."
The local currency rose to 79.17 yen at 8am in Wellington from 78.96 yen after the Bank of Japan yesterday keeping
monetary policy unchanged and affirming plans to expand its monetary base by 80 trillion yen a year.
The kiwi rose to 4.1981 Chinese yuan from 4.1854 yuan yesterday, with China coming back from its Golden Week holiday
today. It gained to 58.71 euro cents from 58.38 cents yesterday after German industrial production reported an
unexpected decline, and was little changed at 43.11 British pence from 43.16 pence after UK manufacturing beat
expectations.
The local currency was little changed at 91.68 Australian cents from 91.65 cents yesterday.
(BusinessDesk)