NZ dollar gains as oil drives commodity index to 9-month high
The New Zealand dollar rose after crude oil gained to a two-year high, leading a rally in commodity prices and in
currencies tied to exports of raw materials.
The kiwi advanced to 69.25 US cents as at 8:30am in Wellington from 68.92 cents late yesterday. The trade-weighted index
gained to 73.45 from 73.22.
Crude oil jumped more than 3 percent amid concern about instability in the Middle East after Saudi Crown Prince Mohammed
bin Salman extended a crackdown on corruption that has seen members of the royal family, ministers and business leaders
detained - a purge seen by some as a move to cement his power over the oil-rich kingdom. The CRB Index of 19 commonly
traded commodities gained 1.6 percent overnight to the highest since mid-February.
"Commodity currencies outperformed, with the NZD rising back over 69 cents against the USD," said Philip Borkin, senior
economist at ANZ Bank New Zealand, in a note. "It looks as though the downside for kiwi is reasonably well supported for
now, especially if this rally in global commodity prices proves to have legs. However, markets are unlikely to push
things too far ahead of the RBNZ’s decision on Thursday, where we expect a cautious message to be retained."
The Reserve Bank's monetary policy statement comes after the bank's survey of expectations showed inflation expectations
remain tepid, adding to the view that the central bank will keep rates on hold at a record low 1.75 percent.
Traders will be watching today for the Reserve Bank of Australia's interest rate review, with no change expected across
the Tasman to the 1.5 percent cash rate target. Ahead of that the government is to release today the terms of reference
for its review of the Reserve Bank Act and tonight sees the latest GlobalDairyTrade auction, which follows two weak
sales.
The kiwi rose to 4.5920 yuan from 4.5694 yuan and gained to 90.12 Australian cents from 89.97 cents. It traded at 52.59
British pence from 52.69 pence and gained to 59.64 euro cents from 59.32 cents. It was little changed at 78.79 yen.
(BusinessDesk)
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