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NZ dollar adds 0.9pc over week

NZN 17/03/2017 Rebecca Howard

The New Zealand dollar ended 0.9 per cent higher on the week after markets were disappointed when the US Federal Reserve didn't announce plans to accelerate the pace of rate increases later in the year.

The kiwi dollar was trading at US69.90 cents as at 5pm in Wellington versus 69.91c late Thursday and 69.31 early Monday.

There was plenty of event risk over the week, including rate decisions from the Bank of Japan, the Bank of England, and key economic data in New Zealand and Australia "but I think the over-arching theme from this week was the 'dovish hike' from the Fed," said Robert Rennie, chief currency strategist at Westpac in Sydney.

There was "a quite dramatic drop in measures of volatility around the world and that environment is probably fairly supportive for the so-called commodity currencies, the Australian dollar and the New Zealand dollar," he said.

Looking ahead, he doesn't expect much action in the kiwi ahead of next week's Reserve Bank of New Zealand interest rate review and statement and said the upside is likely capped at US70c and he would be surprised to see it move much below 69.60c.

Economists are widely expecting the central bank to keep rates on hold at 1.75 per cent at next week's review and maintain a neutral bias.

The kiwi was at 56.59 British pence from 56.99 pence and at 64.88 euro cents from 65.19 cents. It was at A90.93c from 91.03c and 4.8236 yuan from 4.8206 yuan and 79.30 yen from 79.28 yen.

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