The New Zealand dollar has gained in volatile markets after Russian policymakers hiked interest rates to shore up a tumbling rouble and European data beat expectations, sapping demand for the US dollar ahead of the Christmas and New Year holidays.
The kiwi rose to US77.85 cents at 8am on Wednesday in Wellington from US77.45c on Tuesday. The trade-weighted index advanced to 78.23 from 77.90.
Russia’s central bank unexpectedly hiked interest rates to 17 per cent from 10.5 per cent in an effort to stop the nation’s currency extending its decline as falling oil prices weigh on the increasingly isolated nation’s economy. That heightened volatility in currency and interest rate markets, though didn’t spread into equities.
“I’d describe it as a volatile night – equity markets are still up though, so it’s not feeding into a worldwide contagion,” said Sam Tuck, senior foreign exchange strategist at ANZ.
“US dollar positions are being liquidated and the New Zealand dollar is gaining on that. We do have pretty decent real yield.”
The latest GlobalDairyTrade auction showed a 2.4 per cent increase in the average winning price across all products with whole milk powder, the biggest product sold by volume, up 1.4 per cent to $US2270 ($NZ2933) per tonne.
Tuck said the underlying result was softer than the headline indicated, with declines of up to 11 per cent in some later dated whole milk powder contracts.
New Zealand’s third quarter balance of payments is due for release on Wednesday, with economists predicting an annual current account deficit of $6.58 billion, widening from a shortfall of $5.8 billion in the second quarter.
The local currency gained to 91.30 yen at 8am from 90.91 yen on Tuesday, and climbed to 94.71 Australian cents from A94.07c. It edged up to 62.27 euro cents from 62.15 cents and was little changed at 49.43 British pence from 49.47 pence.
BusinessDesk
