Monday 27 March 2017 05:12 PM
NZ dollar gains on deeper relationship with China
By Rebecca Howard
March 27 (BusinessDesk) - A series of cooperation deals inked between New Zealand Prime Minister Bill English and China
Premier Li Keqiang gave the kiwi dollar a lift, despite jitters after US president Donald Trump failed to win enough
support to repeal and replace the Affordable Care Act known as Obamacare.
The kiwi rose to 70.45 US cents as at 5pm in Wellington from 70.23 US cents as at 8am and 70.27 cents in late New York
trading on Friday. The trade-weighted index was unchanged at 76.26.
OMF private client adviser Stuart Ive said the dollar dipped down to around 70 US cents after US president Trump failed
to win enough support given the questions it raises about his ability to push things through going forward. "That seemed
to have a bit of a knock-on effect, a bit of a risk-off scenario was played out initially," he said.
However, it "changed course" on the signing of the agreements between China and New Zealand, given the fiscal and trade
benefits.
The Chinese premier, who is leading a delegation of senior ministers, government officials and businesspeople, met
English at Premier House in Wellington today. At the end of the meeting, English said official talks to upgrade the
existing FTA between the nations will start on April 25 with a goal of building on the deal that's seen two-way trade
triple to $23 billion since it came into force in 2008. The meeting also saw 21 other agreements signed, including a
six-month trial for 10 local meat processors to sell chilled meat to China for the first time, mutual recognition of
trusted exporters to speed up the customs process, a new air services agreement to increase the number of flights
between the countries, and the adoption of a climate change action plan.
The announcement "nudged things up a bit, in particular against the US dollar and the Aussie," said Ive.
Investors will now be focused on how markets in Europe and the US react to Trump's failed effort. Ive noted that Asian
markets, although in negative territory, "aren't running away with it," which may underpin investors confidence
overnight. "We could see further gains (in the kiwi) as long as markets don't get into a risk-averse scenario."
The kiwi dollar was at 56.23 British pence from 56.27 pence on Friday in the US while it gained to 92.34 Australian
cents from 92.14 cents. It fell to 77.73 yen from 78.16 yen and rose to 4.8407 yuan from 4.8362 yuan. It slipped to
64.94 euro cents from 65.06 cents.
The two-year swap rate fell 2 basis points to 2.28 percent while the 10-year swaps were fell four basis points to 3.37
percent.
(BusinessDesk)
ends