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NZ Dollar Remains Buoyant After Strong GDP Data

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, March 28 NZPA - The NZ dollar held firmed a tad today to end the week firmly ensconsed above US80C.

It closed on US80.42c against its US80.37c opening and US80.50c at the same time yesterday. It traded as high as US80.66c.

It eased in early business but then spiked up quarter of a cent after Statistics New Zealand said the economy had expanded 1 percent in the last quarter of 2007. That was faster than the 0.8 percent economists had forecast and analysts said a cut in interest rates is now likely to be further away.

Reserve Bank governor Alan Bollard certainly gave no indication he was in a mood to relent.

In a speech in Sydney he said he was comfortable with interest rates at the current level and signalled no rate cuts on the horizon. Domestic inflation pressures outweighed risks from international market turmoil.

While he said the bank would need to keep a close eye on global economic and financial developments for any indications global activity was slowing more than predicated, he said New Zealand's 8.25 percent official cash rate was appropriate.

The kiwi firmed a little against the Australian dollar, ending on A87.41c from A87.38c while the trade weighted index was up to 71.31 from 71.21.

Meanwhile, the US dollar fell towards record lows against the euro and the Swiss franc as investors remain worried about widening damage to financial firms from the credit crisis.

The dollar slipped back into this week's losing streak as short-covering subsided and rumours on Thursday that Lehman Brothers Holdings Inc could suffer a fate similar to the near collapse of Bear Stearns hurt sentiment, traders said.

Lehman called the rumours "totally unfounded".

NZPA WGT Reuters sml gt

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