The New Zealand dollar gained after China’s inflation decelerated, spurring speculation that China will stimulate the slowing economic growth, boosting prospects for New Zealand exports.
China’s consumer prices rose 4.0 percent in December, demonstrating the slowest rate of growth since September 2010, following the 4.2 percent increase in November. The report led to talks that China may ease its tight policy. The People’s Bank of China reduced reserve requirements for nation’s bank by 0.5 percentage point. That was the first reduction since 2008. The news is positive for New Zealand as China is the country’s second-biggest trading partner.
The New Zealand dollar backed off a little today, but held most of its yesterday’s gains. Europe with its problems puts pressure on commodity currencies, weakening the kiwi. It’s interesting that the euro advanced against the New Zealand currency today after 11 sessions of losses despite the negative sentiment about Europe. The United States, another major trading partner of New Zealand, may yet support the kiwi.
NZD/USD traded at 0.7956 as of 4:50 GMT today after rising from 0.7942 to 07967 yesterday. NZD/JPY was at 61.11, following yesterday’s gain from 61.00 to 61.20. Meanwhile, EUR/NZD rebounded to 1.5972 after it fell from 1.6072 to 1.5934 and reached the record low price of 1.5922 yesterday
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