BLBG:New Zealand Dollar Set for Six-Week Advance After Unexpected Trade Surplus
New Zealand’s dollar was set to complete a six-week gain after a report showed the nation unexpectedly posted its first trade surplus in five months.
The so-called kiwi held a five-day advance against all of its major peers as Reserve Bank of New Zealand Governor Alan Bollard said the nation’s economy can weather a global slowdown. Demand for New Zealand’s dollar and its Australian counterpart was limited on concern Greece is struggling to reach agreement with its creditors on a debt-swap arrangement, curbing demand for higher-yielding assets.
“We are seeing ongoing offshore demand for kiwi dollars,” said Tim Kelleher, head of institutional foreign-exchange sales in Auckland at ASB Institutional, a unit of Commonwealth Bank of Australia. New Zealand’s economy is “going OK, and certainly some of the individual sectors of the country are doing quite well,” he said.
The kiwi dollar was little changed at 82.17 U.S. cents as of 4:15 p.m. in Sydney, set to advance 1.9 percent this week. It dropped 0.5 percent to 63.29 yen, trimming the five-day surge to 1.9 percent. Australia’s currency slid 0.1 percent to $1.0617 and dropped 0.7 percent to 81.78 yen.
New Zealand’s exports exceeded imports by NZ$338 million ($278 million) in December, the statistics bureau said today, whereas economists surveyed by Bloomberg News had predicted a NZ$50 million shortfall. A separate report from the Treasury Department showed the government’s budget deficit was wider than previously forecast in the five months through November on weaker-than-projected tax revenue.
RBNZ Outlook
Australian bonds rose, pushing the yield on benchmark 10- year securities down by 12 basis points, or 0.12 percentage point, to 3.82 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 2.8 percent.
The RBNZ expects a “gradual lift in activity over 2012, consistent with demolition and repairs to housing and infrastructure getting under way,” with full-scale reconstruction expected in 2013, Governor Bollard said in Christchurch today.
Bollard had previously said he expected rebuilding to pick up in the second half of this year. The central bank kept the official cash rate at a record-low 2.5 percent yesterday.
Greek Debt Talks
The Institute of International Finance, which represents private bondholders in debt talks with the Greek government, said “some progress” was made yesterday in meetings between IIF Managing Director Charles Dallara and Greek Prime Minister Lucas Papademos. Work on a possible deal will continue today, the Washington-based group said in an e-mailed statement.
“There are still ongoing concerns over Greece,” said Lee Wai Tuck, a currency strategist at Forecast Pte. in Singapore. “It’s still a sell on rallies for the Aussie and kiwi.”
New Zealand’s dollar has appreciated 1.1 percent in the past week, the best performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The so-called Aussie gained 0.3 percent in the same period.
The kiwi’s 14-day relative strength index against the dollar was at 76, over the 70 level that signals an asset’s price may have risen too quickly. The Aussie dollar’s RSI versus the greenback was at 70.
“They’ve had a strong rally and I think it’s natural to assume you’ll have a period of consolidation,” said Thomas Harr, head of Asian currency strategy at Standard Chartered Plc in Singapore. “They look a little bit overbought.”
To contact the reporter on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.net
To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net
