New Zealand Dollar Drops on Reports Central Bank Selling Again
By Emma O'Brien
June 18 (Bloomberg) -- The New Zealand dollar, the best- performing major currency in the past 12 months, dropped on speculation the nation's central bank intervened to drive it lower for the second time this month.
Traders and strategists at Bank of New Zealand Ltd. and ANZ National Bank Ltd. said the central bank probably sold New Zealand dollars today. The central bank has ``no comment to make,'' spokeswoman Anthea Black said by telephone from Wellington.
It would be the second sale this month by the central bank, which hadn't previously intervened in the currency market since at least 2002. The bank sold New Zealand dollars on June 11, saying the currency had risen to levels ``unjustifiable'' by the country's economic fundamentals.
``They're sending a message: don't mess with us,'' said Danica Hampton, currency strategist at Bank of New Zealand in Wellington.
The local currency traded at 75.22 U.S. cents at 9:59 a.m. in Wellington, after falling to as low as 75.01 cents. It traded at 75.51 cents in late New York trading June 15 and rose to as high as 75.53 at 8:57 a.m. today.
New Zealand's dollar has surged 22 percent in the past 12 months, more than the Brazilean real's 17 percent gain against the U.S. currency. A rising local dollar erodes earnings for exporters such as meat processors and dairy farmers who make up 30 percent of New Zealand's $102 billion economy.
Preemptive Move
``The bank thinks that if it broke above 75.50 cents that it could potentially go a lot higher,'' ``So it's a bit of preemption in that sense.'' Hampton said the Reserve Bank sold a ``large quantity'' of the New Zealand currency through BNZ this morning. She would not reveal the amount.
New Zealand's dollar gained to 76.39 U.S. cents on June 11, its highest since being allowed to trade freely in March 1985. Central banks intervene in the foreign exchange market when they buy and sell currencies to influence exchange rates.
``I'm convinced they've intervened,'' said Alex Sinton, senior currency dealer at ANZ National from Auckland. ``It's now gotten very dangerous for the bank because at this point the impact of this intervention has been less than the last one.'' Sinton would not comment on whether the central bank had New Zealand currency through ANZ National.
The June 11 intervention helped the New Zealand dollar fall 1.4 percent last week, its first weekly loss in two weeks.
The bank would have got ``more bang for its buck'' by intervening on a Monday morning because Australian traders are not yet active and the local market is only just getting in, Hampton said.
New Zealand government bonds were little changed. The yield on the benchmark 10-year note remained steady at 6.81 percent, according to data compiled by Bloomberg. Bond yields move inversely to prices. The one-year swap spread gained 1 basis point to 2.93 percent.
To contact the reporter on this story: Emma O'Brien in Wellington at [color=#0000ff][email protected][/color] .
Last Updated: June 17, 2007 18:23 EDT
sounds like its time to short if it hits 75.50 again.
By Emma O'Brien
June 18 (Bloomberg) -- The New Zealand dollar, the best- performing major currency in the past 12 months, dropped on speculation the nation's central bank intervened to drive it lower for the second time this month.
Traders and strategists at Bank of New Zealand Ltd. and ANZ National Bank Ltd. said the central bank probably sold New Zealand dollars today. The central bank has ``no comment to make,'' spokeswoman Anthea Black said by telephone from Wellington.
It would be the second sale this month by the central bank, which hadn't previously intervened in the currency market since at least 2002. The bank sold New Zealand dollars on June 11, saying the currency had risen to levels ``unjustifiable'' by the country's economic fundamentals.
``They're sending a message: don't mess with us,'' said Danica Hampton, currency strategist at Bank of New Zealand in Wellington.
The local currency traded at 75.22 U.S. cents at 9:59 a.m. in Wellington, after falling to as low as 75.01 cents. It traded at 75.51 cents in late New York trading June 15 and rose to as high as 75.53 at 8:57 a.m. today.
New Zealand's dollar has surged 22 percent in the past 12 months, more than the Brazilean real's 17 percent gain against the U.S. currency. A rising local dollar erodes earnings for exporters such as meat processors and dairy farmers who make up 30 percent of New Zealand's $102 billion economy.
Preemptive Move
``The bank thinks that if it broke above 75.50 cents that it could potentially go a lot higher,'' ``So it's a bit of preemption in that sense.'' Hampton said the Reserve Bank sold a ``large quantity'' of the New Zealand currency through BNZ this morning. She would not reveal the amount.
New Zealand's dollar gained to 76.39 U.S. cents on June 11, its highest since being allowed to trade freely in March 1985. Central banks intervene in the foreign exchange market when they buy and sell currencies to influence exchange rates.
``I'm convinced they've intervened,'' said Alex Sinton, senior currency dealer at ANZ National from Auckland. ``It's now gotten very dangerous for the bank because at this point the impact of this intervention has been less than the last one.'' Sinton would not comment on whether the central bank had New Zealand currency through ANZ National.
The June 11 intervention helped the New Zealand dollar fall 1.4 percent last week, its first weekly loss in two weeks.
The bank would have got ``more bang for its buck'' by intervening on a Monday morning because Australian traders are not yet active and the local market is only just getting in, Hampton said.
New Zealand government bonds were little changed. The yield on the benchmark 10-year note remained steady at 6.81 percent, according to data compiled by Bloomberg. Bond yields move inversely to prices. The one-year swap spread gained 1 basis point to 2.93 percent.
To contact the reporter on this story: Emma O'Brien in Wellington at [color=#0000ff][email protected][/color] .
Last Updated: June 17, 2007 18:23 EDT
sounds like its time to short if it hits 75.50 again.
"i wake up in the morning, and i piss excellence"
, if they are the country with the highest interest rate you know that is something else. just look at countries that are fighting (real and hyper)inflation to see enourmous interest rates.
