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Kiwi gains on yen as tensions calm

NZ Newswire logoNZ Newswire 9/05/2017 Paul McBeth

The New Zealand dollar has gained against the yen as upbeat investor confidence dimmed demand for the relative safety of Japan's currency.

The kiwi rose to 78.45 yen as at 8am on Wednesday in Wellington from 78.17 yen on Tuesday and traded at US68.95 cents from US69.02c.

A calming in geopolitical tensions has seen investors regain confidence as electoral and military uncertainty abates, although commodity prices with weak iron ore particularly weak.

The Chicago Board Options Exchange's volatility index, known as Wall Street's 'fear gauge', was near a 25-year low on Tuesday, while stocks on Wall Street were mixed with the tech-heavy Nasdaq Composite up 0.3 per cent the Standard & Poor's 500 index dipping 0.1 per cent.

That's weighed on the yen, with Bank of Japan governor Haruhiko Kuroda telling politicians he has no plans to pull back on monetary easing.

New Zealand's Reserve Bank will review policy on Thursday, and while governor Graeme Wheeler isn't expected to shift the official cash rate from 1.75 per cent, economists are tipping he may bring forward projected increases.

"The positive risk sentiment environment is also not helpful for the yen. The VIX index closed at its lowest level since December 1993," BNZ currency strategist Jason Wong said in a note.

"With the NZD showing some modest outperformance on the crosses over recent days, some hot money might be lightening up on short NZD positions ahead of Thursday's MPS."

The kiwi held recent gains against its trans-Tasman counterpart, trading at 93.87 Australian cents on Wednesday morning from A93.80c on Tuesday.

The local currency slipped to 4.7617 Chinese yuan from 4.7662 yuan ahead of Chinese inflation data. It increased to 63.36 euro cents from 63.11c and traded at 53.26 British pence from 53.28p.

The trade-weighted index was at 75.43 from 75.36.

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