Currency: Kiwi dollar well underpinned after Reserve Bank statement

The New Zealand dollar remained well underpinned today following yesterday's strong Reserve Bank statement.

Although the bank left the cash rate unchanged, and most economists expect the next rate move to be down -- albeit not until next year -- the bank made it clear the door was wide open for another rate hike.

The kiwi opened up at US72.85c today -- 80 basis points stronger than it was before the RB statement -- and held the gain through the session, closing at US72.94c.

It closed yesterday at US72.60c.

The kiwi climbed to a record against the euro this morning -- fetching 0.5650 euro, against 0.5615 yesterday but eased to 0.5642 by the 5pm close.

Forex traders looked through New Zealand's whopping $192 million March trade deficit announced yesterday.

Economists had predicted a $50m surplus but they put a positive spin on the data, saying it pointed to a robust economy.

BNZ currency strategist Sue Trinh said the kiwi had been boosted by significant unwinding of long Australian dollar, New Zealand dollar positions.

On its other major crosses, the kiwi was buying A93.48c (A93.35c at 5pm yesterday), 76.96 yen (76.89), 38.15 British pence (38.11), and 0.8672 Swiss francs (0.8652).

The trade-weighted index closed at 71.10 (70.88), and the monetary conditions index finished at plus 1099 (1083).

Meanwhile, the euro closed at US$1.2926 (US$1.2932), while the greenback was buying 105.54 yen (105.92) and the Australian dollar was at US78.04c (US77.76c).

On the money markets, the 90-day bank bill yields were unchanged at 7.02 per cent. Bond yields fell with the July 2009 bonds ending at 5.92 per cent (5.94) and April 2015s at 5.87 per cent (5.88).

- NZPA