NZ dollar gains with commodity currency upswing

Thursday 29 September 2016 05:26 PM

NZ dollar gains with commodity currency upswing, Aussie near 5-month high

By Jonathan Underhill

Sept. 29 (BusinessDesk) - The New Zealand dollar gained after an announcement by the Organisation of the Petroleum Exporting Countries that they would reduce production to underpin prices lifted sentiment for commodity currencies including the Aussie.

The kiwi traded at 72.90 US cents as at 5pm in Wellington up from 72.72 cents late yesterday. The trade-weighted index rose to 77.26 from 77.11.

The Australian dollar is trading near a five-month high against the greenback and both the kiwi and Canadian dollars gained on the OPEC announcement, which drove up the price of crude oil. The gain in crude is probably too late for third-quarter inflation in New Zealand, which the central bank has projected to slow to an annual 0.2 percent from 0.4 percent in the second quarter.

"Markets are very choppy. The oil price news was not necessarily a reason for the price to go up but generally speaking minerals have benefited from that and commodity currencies have picked up on the back of that," said Derek Rankin, director of Rankin Treasury Advisory.

The big issue for the central banks in New Zealand and Australia was inflation and if it remained very low, "there will be pressure for them to keep cutting rates." He said RBA governor Philip Lowe had already observed that there's a limit on low he can push interest rates.

The kiwi traded at 94.75 Australian cents from 94.72 cents and rose to 4.8658 yuan from 4.8473 yuan. It gained to 73.95 yen from 73.10 yen and rose to 65 euro cents from 64.81 cents. The kiwi traded at 56.02 British pence from 55.91 pence.

New Zealand's two-year swap rate rose 1 basis point to 1.98 percent and the 10-year swaps rose 2 basis points to 2.45 percent.

(BusinessDesk)

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