NZ dollar holds above 76 US cts as China growth eyed

NZ dollar holds above 76 US cts amid speculation China will move to boost growth

By Paul McBeth

May 29 (BusinessDesk) - The New Zealand dollar held above 76 US cents as a rally in Asian stock markets bolstered investors' appetite for higher-yielding, or riskier, assets amid speculation Chinese policy makers will take steps to boost economic growth.

The kiwi was little changed at 76.10 US cents at 5pm from 76.05 cents at 8am, and 76.08 cents yesterday. The trade weighted index edged up to 69.36 from 69.29.

Asian stock markets gained after China's finance ministry said it will subsidise energy-saving products in a further move to stimulate a slowing economy. China's Shanghai Composite Index rose 0.9 percent in afternoon trading, Hong Kong's Hang Seng was up 0.4 percent, and Australia's S&P/ASX 200 Index gained 1 percent.

Last month government figures showed China's first-quarter growth of 8.1 percent missed analyst's forecasts, stoking fears the world's second biggest economy may slow down faster than expected.

"The kiwi attempted a little sell-off, but Asian equity markets are back up and we've seen the kiwi off its lows," said Tim Kelleher, head of institutional FX sales NZ at ASB Institutional. "Europe might follow Asia's positive markets" and that could see the kiwi push a little higher, he said.

The kiwi bounced off multi-month lows after fears about a possible Greek exit from the euro-zone were allayed by early opinion polls backing the pro-bailout New Democracy party.

Europe has kept investors nervous with Spain facing a bigger bill to shore up its financial sector after Bankia SA, which was recently nationalised, said it will need more government money to keep it afloat.

Investors will be watching for Australian retail trade and New Zealand building consents tomorrow, ahead of Chinese manufacturing and US employment data later in the week.

The New Zealand dollar rose to 60.70 euro cents from 60.49 cents yesterday, and was little changed at 48.55 pence from 48.55 pence. It was little changed at 77.29 Australian cents from 77.25 cents yesterday, and fell to 60.47 yen from 60.97 yen yesterday.

(BusinessDesk)

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