NZ dollar edges higher as concerns over Saudi attack ease
By Jenny Ruth
Sept. 16 (BusinessDesk) - The New Zealand dollar was a little stronger amid promising signs the attack on Saudi Arabia's
major oil facilities will be contained and production swiftly restored.
The kiwi was trading at 63.84 US cents at 5pm in Wellington from 63.68 cents at 7:55am. The trade-weighted index was at
70.72 from 70.60.
Over the weekend, the Houthis, a Yemeni rebel group which is allied with Iran, claimed responsibility for attacks using
drones on two Aramco facilities which halved Saudi production.
While the US has accused Iran of being behind the attacks, Iran has said it was not involved. November Brent crude
initially jumped to almost US$72 a barrel, from US$60.22 on Friday. It was recently trading at US$66.30.
"The market response so far today has been remarkably restrained and disciplined," says Peter Cavanaugh, the senior
client advisor at Bancorp Treasury Services.
While the price of Brent crude oil shot up by about 20 percent, currency and interest rate markets were subdued, he
"There's been some relief from the Saudis saying they were going to get production back" and now the market is back to
awaiting further news on the trade war between the US and China.
"To show how well the New Zealand dollar has done today, there has been some Chinese data out that was pretty rubbishy,"
This included figures showing China's industrial production grew 4.4 percent in August, down from 4.8 percent in July
and the slowest growth since February 2002. Analysts had been expecting 5.2 percent growth, according to a Bloomberg
As well, while China's retail sales rose 7.5 percent in August, that was below analysts' expectations of 7.9 percent
China is the largest trading partner of both New Zealand and Australia while Australia is New Zealand's second-largest
"The New Zealand dollar has withstood all of that, along with the Australian dollar," Cavanaugh says.
The New Zealand dollar was at 92.82 Australian cents from 92.69, at 51.20 British pence from 51.00, at 57.65 euro cents
from 57.52, at 68.84 yen from 68.55 and at 4.5137 Chinese yuan from 4.5097.
The two-year swap rate edged up to a bid price of 1.0086 percent from 1.0034 on Friday, while 10-year swaps eased to
1.4025 percent from 1.4075.