N.Z. dollar firmer

Press, 13 February 1986, Page 26

N.Z. dollar firmer

PA Wellington The New Zealand dollar finished marginally firmer at $U50.5445/60 on the foreign exchange market in Wellington yesterday, compared with its 5U50.5435/50 opening. Dealers said the market was subdued after Tuesday’s hectic trading, when the kiwi reached US55c. Yesterday the kiwi traded up to U554.5C, but both interbank and corporate trading was light, and in the afternoon the currency eased to U554.2c before late position squaring brought it up.

Sentiment for the kiwi remains bullish, with the weaker US currency, natural capital inflows and $2OO million in Eurokiwi drawdowns due for settlement.

"The New Zealand dollar needs a correction before it goes higher. It’s been well bid for a number of weeks and may have peaked for a couple of days,” a senior dealer said.

The Reserve Bank’s trade-weighted exchange rate index edged back to

67.6 at 3 p.m. from 67.8 at 8 a.m.

The kiwi was also worth Aust79.6c, 1.29 marks, 38.7 p and 101.7 yen on the wholesale market in late trading. Traders returning to the Tokyo market after the holiday quickly sold the US dollar down to a new seven-year low of 186.2 yen. Although there were expectations of the dollar falling to 185 yen, operators were wary of Bank of Japan intervention at these levels.

In Tokyo later yesterday, the U.S. dollar was sharply lower at midday after hectic speculative selling, but off a sevenyear low of 186.20 yen traded earlier. Sentiment was extremely bearish about the dollar on expectations of a further drop towards 185 yen In the near term, dealers said.

The Australian dollar staged a recovery in Sydney yesterday afternoon on short covering to close firmer at $U50.6870/77 after an earlier low of $U50.6820, dealers said. The sharp fall — soon after noon — came on rumours that the Federal Budget deficit would blow out, and on market intelligence reports that the Treasurer, Mr Keating, had said the current-ac-count deficit was to be greater than expected.

The market had reacted to the comments believing them to be referring to this Friday’s release of the January balance-of-payments data. In New York overnight the American dollar closed lower

as bearish sentiment continued to plague the currency. Trading was quiet and thin, largely because leading Asian and European foreign exchange centres were closed in observance of national and local holidays, dealers said. A snowstorm that struck the New York metropolitan area contributed to the slow pace of trading. The dollar remained particularly weak against the Swiss currency, falling to 1.9820/35 Swiss francs from 1.9945/65.

The dollar ended at 2.3750/ 60 marks, down slightly from Monday’s finish of 2.3785/00. The United States currency closed unchanged at 187.30/ 40 yen.

Meanwhile, sterling staged a modest technical rebound — but oil price worries tempered the. pound’s gains. Sterling closed at SUSI.4IOO/ 10, up slightly from $U51.4075/85.