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NZ dollar gains as geopolitical fears wane

NZN 8/05/2017 Jonathan Underhill

The New Zealand dollar rose on Monday as waning geopolitical concerns revived investors' risk appetite and demand for growth-linked currencies offering higher returns.

The kiwi dollar rose to US69.23c as at 5pm in Wellington from 69.16c in New York on Friday. The trade-weighted index edged up to 75.39 from 75.27.

So-called 'de-escalation' zones in major conflict areas of western Syria came into effect over the weekend and fighting between forces of President Bashar al-Assad's regime and rebels has reportedly eased since then.

Meanwhile, France's centrist candidate Emmanuel Macron has beaten National Front candidate Marine Le Pen for the presidency ensuring the European Union doesn't face further disruptions after last year's Brexit vote.

And US President Donald Trump's success with his healthcare reforms has revived optimism he may have other successes including on his plan to slash corporate tax.

"There has been positive re-pricing of risk in favour of the kiwi - a bit of risk-on sentiment across the market," said Sheldon Slabbert, a trader at CMC Markets.

"Precious metals have been falling, the carry trade in back on and the yen is weakening again."

The kiwi rose to 78.04 Japanese yen from 77.97 yen and is trading near its highest level since the end of March.

Mr Slabbert says helping the kiwi dollar story has been relatively stable economic data and price gains at recent GlobalDairyTrade auctions.

While the Reserve Bank is expected to keep the official cash rate unchanged at 1.75 per cent on Thursday, it is also likely to give the New Zealand economy "a clean bill of health," Mr Slabbert said.

The kiwi rose to 63.10 euro cents from 62.96 cents in late New York trading on Friday. It rose to A93.48c from 93.25c at the end of last week and gained to 53.41 British pence from 53.31 pence. The local dollar rose to 4.7769 yuan from 4.7728 yuan.

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