NZ dollar holds its ground against greenback despite risk aversion

Tuesday 13th November 2018

The New Zealand dollar held its ground against the greenback despite slumping global equity markets, jitters about Europe and ongoing concerns about US-China trade ructions.

The kiwi traded at 67.45 US cents at 5pm in Wellington from 67.24 US cents at 8.45am and 67.44 US cents late Monday. The trade-weighted index was at 73.97 from 73.83.

Asian stock markets sold off after U.S. stock indices lost m ore than 2 percent, with the Nikkei 225 index down 2.6 percent. Ongoing worries about political risk in Europe on growing fears of a no-Brexit deal and tensions over Italy's budget also kept risk appetite capped. Markets also remain focused on the possible impact of escalating trade tensions between the US and China.

The Kiwi, however, "is holding up remarkably well considering the risk off" mood, said Tim Kelleher, head of institutional foreign exchange sales at ASB Bank.

It also held up against the Australian dollar, trading at 93.47 Australian cents from 93.37 yesterday. Kelleher said the Aussie is weighed by global concerns whereas the kiwi is still benefiting from last week's surprisingly strong jobs data.

Kelleher said the kiwi is also benefiting from a growing view that the Reserve Bank of Australia should stop talking about the next move being a hike and should say it could be a cut while the Reserve Bank of New Zealand should probably be saying there is no chance of a cut given the recent strong data.

The kiwi was at 4.6913 Chinese yuan from 4.6931 yuan. It traded at 52.36 British pence from 51.93 pence and was at 59.96 euro cents from 59.38. It was at 76.91 yen from 76.87 yen.

New Zealand's two-year swap rate lifted 2 basis point to 2.19 percent; the 10-year swaps were unchanged at 3.08 percent.

(BusinessDesk)

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