The New Zealand dollar climbed above 70 US cents for the first time in three weeks as Chinese authorities looked to curb capital outflows, sending the yuan higher. and minutes to the Federal Reserve's last policy review raised uncertainty about the path of US interest rates, sapping demand for the greenback.
The kiwi rose to 70.24 US cents as at 8am in Wellington from 69.89 cents yesterday. The trade-weighted index was little changed at 77.61 from 77.59.
China's yuan posted its biggest gain against the world's reserve currency as the Chinese government attempted to slow the flow of capital out of Asia's largest economy, causing widespread selling of the greenback yesterday.
That added momentum to a drop in the US dollar index, a measure of the greenback against a basket of currencies, as investors reassessed the outlook for Fed rate hikes after minutes to last month's policy meeting showed officials were unsure what level of stimulus president-elect Donald Trump's spending programme and tax reform would inject into the world's biggest economy.
"The Chinese government have been trying to stem the flow and the latest moves made it incredibly expensive to hold short positions in the yuan, so we've just seen a rash of positioning: the yuan surged, the US dollar sinks and everything else goes up against the US dollar," said Stuart Ive, senior dealer foreign exchange at OMF in Wellington.
