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Kiwi ends Q1 weaker than forecast

NZ Newswire logoNZ Newswire 31/03/2017 Rebecca Howard

The New Zealand dollar is weaker than the central bank forecast on a trade-weighted basis at the end of the first quarter.

It has, however, largely held its ground against the greenback, benefiting from disappointment over US President Donald Trump's failure to deliver on campaign pledges.

In its February monetary policy statement the central bank forecast the trade-weighted index would average 79 in the March quarter. It was trading at 75.88 as at 5pm in Wellington on Friday versus 77.42 at the beginning of the quarter.

One of the biggest moves over the quarter has been the decline against the Australian dollar.

As at 5pm it was trading at A91.40c versus 95.62c at the beginning of the quarter.

The Aussie has benefited from stronger prices of metals and iron ore, and an upbeat view of the Australian economy from its central bank.

While it has staged a bit of a comeback in recent weeks, Westpac strategist Imre Speizer said the trend is for the Aussie to go higher, in particular given rising hard commodity prices.

Dairy prices, on the other hand, appear to be waning, which has weighed on the kiwi.

Against the greenback, however, it was trading at US69.86c versus 70.26c late Thursday and 69.34c at the beginning of the quarter.

While it ended the quarter virtually unchanged, it traded as high as 73.74c on February 7 after weak data in the US.

The US dollar also suffered when US President Trump failed to repeal the so-called Obamacare act, as markets began to speculate he may have trouble with future legislation around taxes and border control.

On the day, the kiwi rose to 65.44 euro cents from 65.33 cents. It fell to 55.95 British pence from 56.44 pence and rose to 78.29 yen from 78.14 yen. It fell to 4.8162 yuan from 4.8435 yuan.

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