New Zealand dollar hits 8-month high versus Aussie

The Kiwi dollar is gaining ground on its Australian counterpart as iron ore prices fall amid fears of a global trade war. Picture / Kenny Rodger

The New Zealand dollar rose to an eight-month high against the Aussie dollar and climbed against the greenback as iron ore prices continued to slide amid fears of a trade war sparked by US tariffs on steel and aluminium.

The kiwi dollar rose to A4.12c at 5pm from A93.70c on Friday in New York. The kiwi rose to US72.73c from US72.33c in New York while the trade-weighted index climbed to 74.64 from 74.33.

Iron ore prices have fallen to four-month lows, denting the Aussie as the currency of a major exporter, while dairy product futures have been relatively more resilient.

The kiwi has also been assisted by upbeat comments from Reserve Bank governor-designate Adrian Orr, who said at a briefing for the new policy targets agreement that he was "very, very pleased with the economic state of New Zealand over recent years".

The US dollar index sank to its lowest level in about a month.

"Adrian Orr said the economy is in a pretty healthy state," said Martin Rudings, a senior dealer at OMF. "That always works for people who are looking for something to buy."

By contrast, "there's too much global steel and iron ore just keeps getting sold. China has a lot of stockpiles", he said. Ultimately, "trade tariffs will slow global growth" and that has weighed on the kiwi, and left some investors "a little bit short kiwi".

Figures today showed New Zealand recorded a trade surplus of $217 million in February compared to a $42m deficit in February last year. Goods exports jumped 11 per cent, outpacing a 4.6 per cent gain for imports.

Milk powder, butter, and cheese shipments kept dairy products as the country's largest commodity export, with that category up 5.3 per cent to $1.095 billion.

Earlier, Orr and Finance Minister Grant Robertson held a joint briefing to announce the expanded PTA and proposed changes to the Reserve Bank Act that will put policy decisions in the hands of a committee.

The kiwi dollar rose to 51.33p from 51.14p in New York on Friday and gained to 58.77 euro cents from 58.56 cents. It rose to 4.5909 yuan from 4.5654 yuan and gained to 76.29 yen from 75.76 yen.

New Zealand's two-year swap rate rose 1 basis point to 2.23 per cent and the 10-year swap rate rose 2 basis points to 3.12 per cent.