Currency: Kiwi holds steady after lower than expected CPI

The New Zealand dollar closed little changed from yesterday after it traded in a US54.62-54.82c range today.

It ended here at 5pm at US54.65 compared with US54.53c at yesterday's local close. Its Australian counterpart weakened to US60.35 after opening at 0.6054c and closing yesterday US60.39c.

Dealers said the market was mostly interested in buying kiwi for Australian dollars with that trade being driven by merger and acquisition activity, or the prospect of it.

This includes the $1.2 billion purchase of Independent Newspapers Ltd's newspapers by Australia's John Fairfax Holdings and the possibility of a $6 billion sale of the National Bank, which if it went ahead, would most probably be bought by an Australian bank.

There was not a great deal of interest in today's latest Consumer Price Index, which rose 0.4 per cent in the March quarter, giving an annual rate of 2.5 per cent.

The figure, slightly below market forecasts, has reinforced expectations that the Reserve Bank will sit tight on its current interest rate, economists say.

They believe that inflation, which has remained stubbornly near the top of the Reserve Bank's target range since mid-2000, is at a turning point.

The US dollar was buying 120.25 yen from 120.63 yen at yesterday's local close, while the euro rose to $US1.0762 from $US1.0742.

On the key New Zealand crosses, the kiwi was buying A90.62c (A90.30c at 5pm yesterday), 0.5080 euro (0.5077), 34.79 pence (34.70), 0.7606 Swiss francs (0.7597) and 65.75 yen (65.78).

The Australian dollar was buying $NZ1.1038 ($NZ1.1066).

On the money market, 90-day bills were at 5.82 per cent (5.81 per cent), the monetary conditions index was at plus 152 (143) and the trade-weighted index was at 60.27 (60.18).

Bond yields rallied on the good inflation number with middle and longer-dated bond yields falling a few pips. The April 2004 yields were at 5.48 per cent (5.47), the November 2006s were at 5.59 per cent (5.58) and the November 2011s were at 5.95 per cent (5.97).

- NZPA