NZ dollar gains on Kuroda’s BOJ comments, Weidmann view on euro

Tuesday 12th February 2013

The New Zealand dollar rose against most of its trading peers after a contender for Bank of Japan chief said he favoured more stimulus and after Bundesbank chief Jens Weidmann scotched comments that the euro is overvalued.

The kiwi rose to 83.70 US cents from 83.28 cents at 5pm in Wellington yesterday. The local currency jumped to 78.16 yen from 77.02 yen and climbed to 62.41 euro cents from 62.27 cents.

With Asian trading activity curtailed by public holidays throughout the region, the kiwi gained versus the yen after Asian development Bank head Haruhiko Kuroda told Bloomberg that Japan's prolonged deflation "must be eliminated." The yen weakened against the greenback after the comments by Kuroda, who is a candidate for the BOJ job.

Kuroda's comments that he "favours greater stimulus moved dollar-yen and kiwi-yen moved considerably as well," said Stuart Ive, currency strategist at HiFX.

"The Germans made it very clear they don't believe the euro is overvalued" and that helped set "a slight risk-on tone overnight," Ive said.

The kiwi dollar strengthened to 81.32 Australian cents from 80.89 cents and continues to be supported on the cross on the divergence in policy stance from the two countries' central banks, Ive said. The Reserve Bank of Australia is expected to cut its key interest rate in coming months while New Zealand's central bank is seen standing pat before eventually hiking the official cash rate.

The trade-weighted index rose to 76.01 from 75.54. The kiwi dollar rose to 53.41 British pence from 52.72 pence.

BusinessDesk.co.nz

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