Pressure on NZ dollar

Press, 24 January 1986, Page 12

Pressure on NZ dollar

PA Wellington The New Zealand dollar came under selling pressure in quiet trading on the foreign exchange market, falling about SUSO.S from the day’s high to $U50.5135/ 55 in late trading. While the kiwi unit was still reasonably firm against most currencies, it had been slowly devaluing against the Australian dollar as high interest rates across the Tasman continued to fuel international buying support for that currency. On the cross-rates, the New Zealand dollar was worth 1.26 marks, 36.9 p, 103.7 yen and Aust72c. The trade-weighted Reserve Bank exchange rate index was at 64.7, compared with 64.8 in the morning. The Australian dollar fell slightly to $U50.7107/ 14 in late trading, compared with 1U50.7120/27 in the morning. Sterling remained weak at $U51.3935/50, but was marginally firmer than its $U51.3910/25 opening level. The British unit continued to be dogged by talk of lower oil prices. One dealer calculated that sterling falls by 2 per cent with every SUS2 a barrel fall in oil prices.

The United States dollar recovered from selling pressure overnight, after the release of a lower-than-expected GNP figure, to open in New Zealand at 2.4540/55 marks and 201.73/83 yen, easing slightly late in the day to 2.4530/40 and 201.72/82.

In London sterling continued to slide towards the close as worries about oil prices persisted and the Bank of England apparently omitted to intervene to support the currency, dealers said. The pound ended at 5U51.3940/50, the first time it has closed under SUSI.4O since September, -1985, and compared with its close on Tuesday at SUSI.4OBO/90. It closed at 3.4120/4260 marks from' Tuesday’s closing 3.4600/ 4650.

The pound failed to derive benefit from a lower dollar, which finished weaker at 2.4510/30 marks, compared with Tuesday’s close at 2.4575/ 90.

Dealers said the apparent lack of intervention by the Bank of England to support sterling encouraged its sales even more. One United States dealer said that even smaller corporate cus-' tomers came In to sell sterling. In New York, the American dollar closed mostly weaker but well above the day’s lows as prospects for steady United States interest rates offset a downward revision of fourth quarter real gross national product growth, dealers said. The dollar ended at 2.4585/00 marks, off from 2.4610/20 but above a day’s low of 2.4355. Meanwhile, sterling slid 2c to SUSL39IO/20 from SUSI.4IOO/10 on Tuesday as the recent drop in oil prices continued to batter the pound.