WSJ:New Zealand Dollar Down Late As Shanghai Stocks Fall
By Lucy Craymer
WELLINGTON--The New Zealand dollar is slightly lower late Tuesday due to weakness after stocks in Shanghai extended Monday's sharp declines on sustained fears over tight liquidity in the Chinese banking system.
"We've been ignoring Chinese equities for the last six months but all of a sudden it's the trade of the day again," said ASB Head of FX Institutional Sales New Zealand Tim Kelleher. This led to weakness in both Australian stocks and the Australian dollar, which in turn weighed on the New Zealand dollar.
Given that the declines in the New Zealand dollar and Australian dollar had "been going on for longer than the equities market" investors were better positioned for concerns about the global economy, he said.
However, he added that weakness in equities globally would likely contain any bounces in the New Zealand dollar as would selling of the New Zealand dollar as the end of the month approaches and "positions need to be squared up."
In late Wellington trading, the New Zealand dollar was at US$0.7725 compared with US$0.7752 late Monday, and at A$0.8373 against the Australian dollar compared with A$0.8407.
The April 2015 New Zealand government bond fell 7 basis points to 2.87%, while the April 2023 bond dropped 9.5 basis points to 4.145%.
