BLBG:Kiwi Dollar Drops as Wheeler Says Prepared to Intervene
New Zealand’s dollar weakened versus all of its 16 major counterparts after central bank Governor Graeme Wheeler said the monetary authority is prepared to intervene to influence the currency’s level.
The so-called kiwi fell against the dollar and yen as Wheeler said the Reserve Bank of New Zealand can “attempt to smooth the peaks” of the exchange rate, in the text of a speech today in Auckland. Australian bonds fell, pushing the benchmark 10-year yield to the highest level in nine months, as an increase in iron-ore prices to the most in five weeks curbed demand for the safety of the top-rated debt.
Wheeler’s comments are “clearly very bearish for the kiwi,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “This is a bit of a stepped-up stance as far as the RBNZ’s policy on intervention is concerned.”
The New Zealand dollar dropped 0.7 percent to 84.13 U.S. cents as of 1:59 p.m. in Sydney. It declined 0.7 percent to 78.66 yen. The two-year swap rate, a fixed payment made to receive floating rates that is sensitive to expectations for borrowing costs, fell 4 1/2 basis points to 3.03 percent.
The rate on Australia’s 5.5 percent security due April 2023 touched 3.61 percent, the highest since May 2. The three-year yield reached 2.94 percent, a level unseen since Feb. 4. The Australian dollar bought $1.0348 after rising 0.5 percent to close at $1.0356 in New York.
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
