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Kiwi Pushes To New Two-Month Highs

Fuseworks Media
Fuseworks Media

Wellington, March 20 NZPA - The New Zealand dollar pushed above US56c early today for the first time in more than two months, as the US dollar continued to reel in the wake of the Federal Reserve's moves to inject more money into the US economy.

The Fed said yesterday (NZT) it would purchase $US300 billion ($NZ563.5 billion) of long-dated Treasuries over the next six months and increase mortgage-backed debt purchases -- sending the US dollar to its worst one-day loss since at least 1985.

After peaking around US56.15c the kiwi was buying US55.79c at 5pm today from US54.16c at 5pm yesterday.

BNZ Capital currency strategist Danica Hampton said the kiwi rate against the greenback had chased broad US dollar weakness.

Analysts and investors feared the increase in US money supply would erode the purchasing power of the US dollar.

"While their concerns have so far been expressed with widespread selling of the USD we should note that the link between whether or not quantitative easing undermines the USD is inflation," Ms Hampton said.

"Only if quantitative easing stokes inflation will it erode the purchasing power of US dollars and in the longer term weigh on the USD."

Buoyed by today's news that New Zealand in February had the highest migration gain since November 2006, the kiwi also gained against other major currencies.

Against the aussie dollar, it climbed to A81.06 at 5pm from A80.17c at 5pm yesterday.

The kiwi was also buying 0.4078 euro at 5pm from 0.4025 and 52.71 yen from 51.99. The trade weighted index was 55.13 at 5pm from 54.17 24 hours earlier.

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