NZ dollar gains after Key comments

  • 20/07/2015
Prime Minister John Key (Simon Wong/3 News)
Prime Minister John Key (Simon Wong/3 News)

By Paul McBeth

The New Zealand dollar spiked higher after Prime Minister John Key said the Kiwi had fallen faster than expected.

The Kiwi rose to US65.62 cents at 5pm from 65.15 cents at 8am and 65.11 cents on Friday in New York. The trade-weighted index gained to 69.85 from 69.36 last week.

Mr Key told reporters at his weekly post-Cabinet press conference the local currency had fallen faster than expected, and that low interest rates will help support the economy.

Traders have fully priced in a 25 basis point cut to the 3.25 percent official cash rate on Thursday and an outside chance governor Graeme Wheeler will lop the rate by 50 points after a slump in global dairy prices last week.

"The Kiwi will fall if Wheeler cuts by 50," said Imre Speizer, senior market strategist at Westpac Banking Corp.

"If it's 25, it will depend on his guidance - if there's strong guidance for more cuts coming the Kiwi will go down a little bit or stay the same, if it's 25 with no solid guidance, the Kiwi will go up."

A BusinessDesk survey of 11 currency advisers on Monday predicted the Kiwi will trade between US63.50 cents and US67.05 cents this week.

The local currency climbed to 89.23 Australian cents from 88.30 cents on Friday in New York, and rose to 4.0760 Chinese yuan from 4.0424 yuan.

It advanced to 60.62 euro cents from 60.13 cents last week and increased to 42.08 British pence from 41.71 pence. The kiwi rose to 81.50 yen from 80.78 yen last week.