NZ dollar weakens despite positive trade war noises

NZ dollar weakens despite positive trade war noises

By Jenny Ruth

Aug. 27 (BusinessDesk) - The New Zealand dollar fell despite signs China wants to renew trade talks with the US and despite Reserve Bank of Australia deputy governor Guy Debelle trying to talk the Australian dollar down.

The kiwi was trading at 63.65 US cents at 5pm in Wellington from 63.83 cents at 7:55am. It was at 94.17 Australian cents from 94.24 cents and the trade-weighted index was at 71.07 points from 71.23.

“The kiwi has massively under-performed, especially against the Australian dollar,” says Tim Kelleher, head of foreign exchange sales at Commonwealth Bank of Australia.

“The kiwi’s had a pretty poor 24 hours. Maybe there’s some M&A stuff going on that I don’t know about because it certainly can’t rally,” Kelleher says.

In a speech today in Canberra to the Economic Society of Australia, Debelle said the Australian dollar can act as a shock absorber for the Australian economy amid the increasing uncertainty caused by the escalating trade war between the US and China.

He said Australia has been a major beneficiary of the global rules-based trading system.

“The current threats to the system are a significant risk to both Australia and the world,” he said.

US President Donald Trump, having escalated trade tensions over the weekend, said that he believed China is sincere about wanting to reach a deal.

“They mean business. They want to make a deal,” Trump told journalists at the G7 meeting in France. “This is the first time when I’ve seen them and they really want to make a deal,” Trump said, characterising the US as a “piggy-bank” that the world has been robbing for years.

Chinese Vice-Premier Liu He also said that China is willing to resolve the dispute through “calm” negotiations, a message seized on with relief by financial markets.

“We think an escalation of the trade war is against the interest of China, the US and the entire world,” Liu, China’s top trade negotiator, told a technology conference in Southern China.

The New Zealand dollar was trading at 52.11 British pence from 52.22, at 57.34 euro cents from 57.50, at 67.31 yen from 67.73 and at 4.5569 Chinese yuan from 4.5633.

The New Zealand two-year swap rate edged up to a bid price of 0.9432 percent from yesterday’s close at 0.9267. The 10-year swap rate rose to 1.2175 percent from 1.1950.

(BusinessDesk)

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