BLBG:New Zealand Dollar Declines on RBNZ Intervention; Euro Advances
New Zealand’s dollar fell to a five- week low versus its U.S. counterpart after Reserve Bank Governor Graeme Wheeler said the central bank has sold the currency and may do so gain to boost exports.
The so-called kiwi has surged 45 percent against the greenback since the end of 2008, the biggest advance, along with its Australian peer, among more than 150 currencies tracked by Bloomberg. Australia’s dollar erased losses after Chinese data showed imports grew more than economists estimated. The euro rose for a second day versus the dollar after German industrial production data unexpectedly rose.
“Central banks who haven’t had a need to cut rates are seeing that their currencies have appreciated and they are having to lean against this strengthening pressure,” said Michael Sneyd, a currency strategist at BNP Paribas SA in London. “New Zealand is where we’ve had the most aggressive comments and action. It is causing some long kiwi positions to be taken out.” A long position is a bet an asset will rise.
The New Zealand dollar dropped 0.7 percent to 83.94 U.S. cents at 7 a.m. New York time after touching 83.60, the lowest since April 1. The yen was little changed at 98.97 per dollar. The euro gained 0.4 percent to $1.3126 and advanced 0.3 percent to 129.90 yen.
RBNZ Intervention
Wheeler told the New Zealand parliament’s finance and expenditure select committee in Wellington today that he reserves the right for further currency sales to damp gains in the kiwi. The RBNZ publishes monthly figures for its net currency sales that may or may not involve direct intervention, which show it sold NZ$2 million in March, and NZ$199 million in December. It had an intervention capacity of NZ$8.7 billion at March 31, the data shows.
“Wheeler is clearly indicating he wants to see a lower New Zealand dollar, because of what the currency’s strength is doing to the long-term health of the economy, especially to manufacturing,” said Greg Gibbs, a Singapore-based senior currency strategist at Royal Bank of Scotland Group Plc. “They don’t want the credit-fueled recovery being forced on them by unprecedented monetary easing from global central banks.”
In China, imports rose 16.8 percent in April from the prior month, the customs administration said today in Beijing. That was more than the 13 percent increase expected by economists in a Bloomberg survey. Exports grew 14.7 percent last month from March. China is the biggest trading partner for both Australia and New Zealand.
“A lot of the negative news is already in the price for the Aussie dollar,” Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. “We look to accumulate longs on the relative value basis.”
German Data
The so-called Aussie was little changed at $1.0198, after earlier weakening as much as 0.3 percent. It jumped 0.9 percent to NZ$1.2147, rallying from a more-than three-year low of NZ$1.1958 yesterday.
The euro extended its advance after a report showed German industrial production rose 1.2 percent in March from a revised 0.6 percent expansion the previous month. That was a second month of gains and compares with a 0.1 percent contraction forecast by economists in a Bloomberg survey.
“The market was surprised by the German industrial production figures and that what’s driving the euro,” said Lutz Karpowitz, a senior currency strategist at Commerzbank AG in Frankfurt. “However, the picture is still very mixed. Europe as a whole is still in a recession.”
Implied Volatility
One-week implied volatility for the euro-dollar rate, based on currency option prices, was at 7.34 percent, after dropping to 7.33 percent yesterday, the lowest since Jan. 10.
Swedish Finance Minister Anders Borg warned that the krona’s strength is becoming a concern for the export-oriented economy and called on the central bank to take the currency’s appreciation into consideration.
“The krona could become an issue, particularly from the central bank perspective,” Borg said yesterday in an interview in Abuja, Nigeria.
Sweden’s krona was little changed at 8.5437 per euro and added 0.4 percent to 6.5082 against the dollar.
Norway’s krone fell 0.3 percent to 7.6646 per euro. The central bank will keep its key rate unchanged at 1.5 percent for a seventh meeting, according to economists surveyed by Bloomberg New.
To contact the reporters on this story: Neal Armstrong in London at narmstrong8@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net
To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net
