NZ dollar holds near 5-month high

Friday 3rd February 2012

The New Zealand dollar held near a five-month high as rising commodity prices stoked optimism global growth will revive enough to underpin demand for the nation’s agricultural exports.

The kiwi dollar traded at 83.31 US cents, from 83.46 cents late yesterday, and earlier touched 83.69 cents, the highest since Sept. 2. The trade-weighted index was little changed at 73.06, also near the highest since early September.

Figures yesterday showed New Zealand commodity prices rose in January for the first time since May last year. The ANZ Commodity Price Index rose 1.2 percent last month. That adds to positive sentiment for global growth that followed stronger-than-expected manufacturing reports out of China, Germany and the US this week. Investors are now awaiting US non-farm payrolls on Friday for further signs of revival while keeping a watch on negotiations on the Private Sector Involvement (PSI) in Greece's bond swap program.

“An absence of a sharp fall in commodity prices is a key strand to our view that the NZD will be fairly well supported on a 12 month horizon,” said Kymberly Martin, strategist at bank of New Zealand, in a note. “Yesterday’s data did nothing to undermine that view.”

There are still clouds on the horizon. The Treasury’s briefing to the incoming government yesterday showed it lowered its forecast for real gross domestic product growth in the year ending March 31, 2013, by about 50 basis points to 3 percent.

Gabriel Makhlouf, secretary to the Treasury, said in the report released this week but completed in November that New Zealand’s “large fiscal deficit and high external indebtedness continue to expose the economy to risks.”

Locally today, Statistics New Zealand is due to release figures for international travel and migration for December, though Martin said the data probably won’t have much bearing on the kiwi dollar.

The New Zealand dollar slipped to 63.42 yen from 63.51 yen late yesterday and edged up to 52.70 British pence from 52.64 pence. The kiwi was little changed at 63.34 euro cents from 63.28 cents. The currency rose to 77.79 Australian cents from 77.73 cents.

(BusinessDesk)

BusinessDesk.co.nz

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