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Kiwi extends gains to two-week high

NZ NewswireNZ Newswire 13/04/2016 Jonathan Underhill

Kiwi extends gains to two-week high © Bloomberg/BLOOMBERG NEWS Kiwi extends gains to two-week high The New Zealand dollar rose, extending its gains to a two-week high, after property sales and food price data underpinned the potential for stronger economic growth and inflation that would make further interest rate cuts by the Reserve Bank less urgent.

The kiwi rose to 69.39 US cents at 5pm in Wellington, from 69.13 cents at the start of the day and up from 68.82 cents late Tuesday. The trade-weighted index rose to 73 from 72.51.

Real Estate Institute data on Tuesday showed the median national house sale price rose 4.2 per cent to $495,000 in March while sales rose 8.2 per cent to a nine-year high for the month of 9,527. Auckland's median price rose to a record $820,000.

Government figures on Wednesday showed food prices rose 0.5 per cent in March, or 0.8 per cent seasonally adjusted, prompting some forecasters to lift their estimate for first-quarter inflation scheduled for release next week.

The flow-on effect was that traders reduced their bets for an April rate hike in favour of June.

"The housing and food price data argues away from cutting in April," said Imre Speizer, a strategist at Westpac. "Locally the economy is doing reasonably well - the only issue has been low inflation. It still requires another cut by RBNZ but there's not a panic to do so."

The kiwi had already gained on stronger commodity prices and on speculation the Federal Reserve won't rush to raise interest rates in the US weighed on the greenback.

The New Zealand dollar was unchanged at 90.10 Australian cents and rose to 61.03 euro cents from 60.32 cents. It gained to 48.63 British pence from 48.31 pence, rose to 75.55 yen from 74.48 yen and reached 4.4847 yuan from 4.4502 yuan.

The two-year swap rate rose 4 basis points to 2.24 per cent and 10-year swaps rose about 6 basis points to 2.99 per cent.

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