Exporter demand halts NZ dollar's slide
By Rebecca Howard
Aug. 13 (BusinessDesk) - The New Zealand dollar was largely unchanged in local trading as exporters piled into the
currency at a two-year low, offsetting the downbeat tone sparked by Turkey's economic woes.
The kiwi traded at 65.72 US cents as at 5pm in Wellington versus 65.68 cents at 8am and little changed from 65.79 cents
at the New York close on Friday. The local currency hadn't been below 66 US cents since March 2016. The trade-weighted
index was at 71.47 from 71.36 late Friday.
Investors were jittery that a plunge in the Turkish lira, which has depreciated a further 4.2 percent today, could
trigger a banking crisis given Spanish, Italian and French lenders are exposed to Turkish foreign currency debt. The
kiwi, however, had already been hit by news the Reserve Bank expects to keep the official cash rate on hold for a year
longer than previously forecast and could even cut rates, and spent much of the Asian session in a tight range on the
back of exporters buying the local currency.
"It's held up reasonably well, considering all the noise," said Tim Kelleher, head of institutional foreign exchange
sales at ASB Bank. While it could fall further, "I think we are pretty close to the bottom of the range here and at
65-to-65.50 will be very hard to get through."
Kelleher noted that the 20-year average for the kiwi is 66.12 US cents and the 30-year average is 64.39 cents and "we
are definitely seeing some good buying on dips," which is limiting any slide in the currency.
He also warned that if the Turkish situation stabilises markets could turn around quickly, which will also give the kiwi
some respite.
The kiwi fell to 72.40 yen form 73.02 yen on Friday in New York and traded at 90.55 Australian cents from 90.24 cents.
It was at 57.81 euro cents from 57.76 cents last week and traded at 51.53 British pence from 51.55 pence. The kiwi
lifted to 4.5200 Chinese yuan from 4.5066 yuan last week.
New Zealand's two-year swap rate was unchanged at 1.99 percent while 10-year swaps were unchanged at 2.86 percent.
(BusinessDesk)