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NZ dollar sinks against yen after tax halt

NZ NewswireNZ Newswire 1/06/2016 Tina Morrison

The New Zealand dollar sank against the yen after Japanese Prime Minister Shinzo Abe said he would delay a planned increase in the sales tax rate, damping expectations for further monetary stimulus.

The kiwi slid to 74.55 yen at 8am in Wellington, from 74.95 yen at 5pm on Wednesday. The local currency increased to 68.15 US cents from 67.84 cents, aided by a 3.4 per cent gain in prices on the GlobalDairyTrade platform overnight.

The yen strengthened after Mr Abe announced he would postpone increasing Japan's sales tax to 10 per cent until 2019. That damped speculation that the country may add more monetary stimulus, pushing up the currency.

"Japan delayed a sales tax hike for two-and-a-half years," OMF's Stuart Ive said. "The longer-than-expected delay raised fears that Japan was also in no hurry to weaken the yen currency through monetary stimulus."

The New Zealand dollar rose to 93.91 Australian cents from 93.24 cents ahead of Australian data on trade and retail sales for April.

The kiwi increased to 47.28 British pence from 46.83 pence, advanced to 4.4807 yuan from 4.4734 yuan, and was little changed at 60.88 euro cents from 60.98 cents. The trade-weighted index gained to 73.48 from 73.21.

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