KEY POINTS:
The New Zealand dollar held above US69c today, supported by business confidence figures, strong revised budget figures, immigration data and the prospect of a rate rise in January.
The kiwi closed on US69.07c, virtually unchanged from its opening and US69.05c close at 5.15pm yesterday.
Treasury forecast the 2007 headline operating surplus to be $6.2b, compared to the forecast of $5.7b in the budget.
The Government will also have a positive cash position of $100 million after it has paid for all investments and loans compared to Treasury's last prediction of a $1.4b deficit.
The higher surpluses will increase pressure for tax cuts which Reserve Bank governor Alan Bollard said recently would be met by higher interest rates if enacted while inflation pressures remained strong.
Finance Minister Michael Cullen did his best to hose down tax cut expectations.
Treasury increased its forecast for economic growth to 1.8 per cent in the March 2007 year from 1.0 per cent on budget night, but the following year's growth would only be 2.3 per cent against the earlier forecast of 3.3 per cent.
Interest rates were forecast to be higher in 2007, but sharply lower the following year.
New migration data showed 229,900 overseas visitors arrived in the country for short term stays, up 7 per cent on November 2005 and a record for a November month.
There was a seasonally adjusted 1900 net inflow of long-term migrants in November to bring the total for the year to nearly 15,000.
Citigroup economic and market analysis director Annette Beacher said the acceleration in migration inflow remained a clear offset to a widely anticipated slowdown of domestic demand.
Against the Australian dollar, the kiwi closed on A88.44c compared with its A88.38c close yesterday. The trade weighted index finished on 68.27, against 68.26 yesterday.
The US dollar slipped against the euro and was steady against the yen with dealers squaring books amid decreasing volume ahead of a Bank of Japan policy meeting.
The euro edged up 0.1 per cent from late Friday to US$1.3098, well off a 20-month high of around US$1.3365 touched on December 8. Against the yen, the dollar was relatively unchanged at 118.07 yen ahead of a Bank of Japan policy meeting.
George Davis, senior currency strategist at RBC Capital Markets in Toronto, said the dollar was recovering from "extremely oversold conditions," adding that investors were in the process of closing their books on 2006.
5pm today 5pm yesterday
NZ dlr/US dlr US69.07c US69.05c
NZ dlr/Aust dlr A88.44c A88.38c
NZ dlr/euro 0.5271 0.5275
NZ dlr/yen 81.44 81.54
NZ dlr/stg 35.42p 35.34p
NZ TWI 68.27 68.26
Australian dollar US78.07c US78.14c
Euro/US dollar 1.3098 1.3090
US dollar/yen 117.90 118.08
- NZPA