NZ dollar tops A78c briefly

Friday 28th January 2011

The New Zealand dollar held above US77c, finishing the week around a US cent higher than it started it, and it pushed through the A78c level earlier today after breaking through it briefly on Thursday night.

The Australian dollar was weakened this week by a negative reaction to government plans for a levy to raise money for flood relief and a scaling back of expectations about further rate rises.

The NZ dollar was at US77.27c at 5pm, which is little changed from the same time yesterday.

It briefly pushed above A78c against the Australian dollar early today for the first time in two months, and was back there in afternoon trading, settling around A78.09c at 5pm from A77.55c at the same time yesterday.

The New Zealand market is expected to be reduced on Monday due to the Auckland Anniversary Day regional holiday.

Reserve Bank governor Alan Bollard kept to the script in a speech to a business audience today in which he spoke about the difficulties of forecasting after the global financial crisis.

Bollard said that as forecast, the consumers price index jumped 4% for the year to the December quarter as a result of the goods and services tax increases.

"Despite this, we think price inflation remains comfortably under control. This is the message that was communicated in the December monetary policy statement and repeated in our January official cash review this week.

"Consequently, it now seems prudent to keep the Official Cash Rate low until the recovery becomes more robust and underlying inflation pressures show more obvious signs of increasing."

The NZ dollar was at 63.87 yen at 5pm from 63.44 yen yesterday.

ANZ bank said disappointing data from the US had helped the NZ dollar keep its gains against the US dollar overnight, after the kiwi was boosted by yesterday's Reserve Bank statement.

While the Reserve Bank kept the Official Cash Rate at 3%, the accompanying statement had been less dovish than the market anticipated and the NZ dollar rose significantly on the news, ANZ said.

The NZ dollar was little changed against the European currency, buying 0.5636 euro at 5pm from 0.5637 euro yesterday, while the trade weighted index lifted to 68.99 at 5pm from 68.79 at the same time yesterday.

NZPA

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