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Kiwi climbs on Aussie over China reports

NZ Newswire logoNZ Newswire 28/12/2016 Paul McBeth
New Zealand coin is arranged for a photograph in Wellington, New Zealand © Mark Coote New Zealand coin is arranged for a photograph in Wellington, New Zealand

The New Zealand dollar has gained against its trans-Tasman counterpart as reports of a depreciating Chinese yuan weighed on investors' outlook for the Australian economy.

The kiwi increased to 96.24 Australian cents as at 8am on Thursday from A96c on Wednesday, and rose to 4.8107 Chinese yuan from 4.8087 yuan.

The People's Bank of China rejected reports the yuan crossed the 7 yuan per US dollar level seen as a psychological barrier, calling the stories "irresponsible".

The yuan recently traded at 6.9559, near an eight-and-a-half year high, and last traded above 7 in May 2008. The world's second-biggest economy is facing a slowing pace of economic growth, which has stoked concerns about its impact on Australian trade with China.

"There's a lot of rumours about China overnight again and it's probably not helping the Aussie dollar, with talk about the Chinese yuan crossing the psychological barrier of seven," said ASB Institutional's Tim Kelleher.

"The kiwi's outperformed itself again."

On Thursday morning, the local currency was little changed at US69.16 cents from US69.14c on Wednesday as the greenback continued to rally on the expectation rising US interest rates will accompany president-elect Donald Trump's plans for infrastructure spending and tax reform when he takes office next month.

The kiwi also gained to 66.29 euro cents from 66.04 cents, advanced to 56.59 British pence from 56.26p and fell to 81.06 yen from 81.31 yen.

The trade-weighted index rose to 77.41 from 77.26.

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