The New Zealand dollar closed firmer yesterday, and while real incentives to buy are still absent, heightened nervousness about American assets offers a faint possibility that the US dollar's enduring dominance may ease.
Kiwi trade yesterday was light and within a very tight 10-basis point range.
It closed at 40.36USc (40.13c on Friday).
A currency dealer said the kiwi, aussie and euro had held up well over the weekend after the latter's drop below 83USc.
Furthermore, the local unit has shown more resilience of late than its two long-time travelling companions.
"The kiwi is probably de-coupling a bit from the euro and aussie," the dealer said.
Last week Australian and American analysts said the New Zealand dollar had bottomed. That does not change the fundamentals but it may have provided a catalyst for a more favourable offshore perception.
The dealer said volatility on American bourses meant people were not quite as secure about their big dollar investments. While for now that simply meant shuffling money between US stocks and Treasuries it offered hope that global investors may at last soon seek investments in other economies. That would allow other currencies to rise off their lows.
However, Greenwich Financial Services director Garry Wycherley said an International Monetary Fund report released after market on Friday gave little prospect the kiwi would strengthen.
The IMF said it saw mainly downside risks for New Zealand's fiscal projections, with the possibility of weaker Government revenues resulting from lower growth than the projected 2.5-3.0 per cent a year over the medium term.
The market this week is awaiting American releases including a report from the National Association of Purchasing Managers (NAPM), the beige book of anecdotal interest rate evidence from Federal Reserve districts, and US employment data.
The Australian dollar finished locally at 52.33USc (52.00c) and the euro rallied from last week's fresh low of 82.28USc to 84.10c.
On the crosses the kiwi was at 77.12Ac, 27.77 pence, 93.85 marks, and 0.4800 euro.
Bond yields finished fairly steady, although confusion about the future track for interest rates has intensified as bank economists and some trading desks set differing paths.
The average expectation among economists is for the Reserve Bank to raise its official cash rate early next year from 6.50 per cent, en route to a peak of around 7.00 per cent.
But bill traders were not so sure. The differences have been highlighted by major inter-bank trader the Bank of New Zealand breaking ranks and forecasting a small cut in the cash rate to 6.25 per cent in the first quarter next year.
- NZPA
<i>Currency</i>: Slivers of hope for thin kiwi
AdvertisementAdvertise with NZME.