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Threat of oil move lifts Kiwi

NZ NewswireNZ Newswire 8/08/2016 Paul McBeth

The New Zealand dollar has joined other commodity-linked currencies in rising on speculation oil producers will limit global supply.

The local currency rose to US71.36 cents at 8am on Tuesday in Wellington from US71.11c on Monday. The trade-weighted index advanced to 75.86 from 75.61.

The price for Brent crude oil rose on speculation members of the Organisation of the Petroleum Exporting Countries would consider joint action to reduce production if prices continue to slide.

The Thomson Reuters/CoreCommodity CRB index, a broad measure of prices for raw materials, rose 0.5 per cent, helping spur demand for commodity-sensitive currencies such as the kiwi and Australian dollar.

The kiwi's rally comes ahead of Thursday's Reserve Bank policy review, where governor Graeme Wheeler is expected to cut the official cash rate at least a quarter-point to 2 per cent and lower the projected track for future rates in a bid to drag down the kiwi dollar and reduce the deflationary impact of cheap imports.

ANZ senior rates strategist David Croy says the Reserve Bank may be able to cap the New Zealand dollar if it's prepared to show a lower track for the OCR, "but with so much easing already priced in, and growth accelerating, we struggle to be outright bearish".

Government data on Tuesday will show consumer spending on credit and debit cards in July.

In the morning, the local currency climbed to 4.7517 Chinese yuan from 4.7365 yuan on Monday after figures showed China's imports fell 12.5 per cent in July from a year earlier.

The kiwi edged down to 93.26 Australian cents from A93.42c and rose to 73.08 yen from 72.55 yen.

It gained to 54.71 British pence from 54.35p and increased to 64.39 euro cents from 64.06c.

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