NZ dollar gains as China rejects currency manipulation claim

NZ dollar gains as China rejects currency manipulation claims

By Paul McBeth

Aug. 22 (BusinessDesk) - The New Zealand dollar gained as Chinese authorities rejected assertions from US President Donald Trump that the world's most populous nation was manipulating its currency.

The kiwi rose to 66.89 US cents as at 8am in Wellington from 66.66 cents yesterday. The trade-weighted index advanced to 72.20 from 71.97 yesterday.

The US dollar index fell 0.7 percent as traders latched on to Trump's comments in an interview with Reuters accusing China of manipulating the yuan, which has depreciated 5.3 percent since the start of the year to 6.8444 per US dollar. People's Bank of China monetary policy director Li Bo rejected the claim, saying the central bank "won't use policy to devalue the yuan and we won't use the exchange rate as a weapon to react to external pressures from trade conflicts". The kiwi rose to 4.5789 yuan from 4.5590 yuan yesterday.

"The market paid more attention to his (Trump's) comments on the Fed and currencies than the likely stalemate in trade talks, sending the USD lower and UST yields lower," Bank of New Zealand senior markets strategist Jason Wong said in a note. "While last week Trump seemed unperturbed by the strength of the USD – it reflecting how well the US economy was doing – he would clearly prefer lower rates and a weaker USD."

Currency traders largely ignored the latest Global Dairy Trade auction, where prices fell 3.6 percent across all products. Whole milk powder prices fell 2.1 percent to US$2,883 a tonne.

"NZX dairy futures show an expected payout for FY19 close to $6.60, well down from Fonterra’s current $7 projection," Wong said.

Local data today include June quarter retail sales which are expected to show a modest gain, coming before the government's families package injected cash into low-income households.

The kiwi increased to 90.81 Australian cents from 90.56 cents yesterday and rose to 73.85 yen from 73.33 yen. It traded at 57.81 euro cents from 57.79 cents yesterday and was little changed at 51.85 British pence from 51.94 pence.

(BusinessDesk)

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