The New Zealand dollar is heading for a 1.8 percent weekly gain against the greenback and near new post-float highs on a trade-weighted basis amid speculation China's government will take action to shore up a sluggish economy, adding to an upbeat outlook for local growth.
The kiwi rose to 86.85 US cents at 5pm in Wellington from 85.32 cents at the New York close last Friday. It reached a two-and-a-half year high 86.96 US cents, and was up from 86.72 cents at 8am and 86.25 cents yesterday. The trade-weighted index reached a new post-float high 81.03, trading at 80.94 at 5pm from 80.43 yesterday. The TWI is heading for a 1.2 percent weekly gain from 80 at the New York close last Friday.
A BusinessDesk survey of nine traders and strategists predicted the local currency would trade between 84 US cents and 87 cents this week, from 85.40 cents at 8am on Monday. Three expected the currency to remain relatively unchanged, four expected it to gain and two said it could fall.
The Australasian currencies got a boost today after Chinese Premier Li Keqiang was reported as saying he was confident growth will be in a reasonable range, and that his nation can't ignore risks facing the economy, fuelling expectations the government will act to spur the economic expansion. China is New Zealand and Australia's largest trading partner.
The prospect of Chinese stimulus added to an already favourable view of the New Zealand economy, which got another boost yesterday when the February trade balance beat expectations, and after Reserve Bank deputy governor Grant Spencer signalled the monetary authority will continue to hike interest rates even with an elevated exchange rate.
