The New Zealand dollar is headed for a 2.4 per cent weekly gain against the greenback. Photo / File
The New Zealand dollar is headed for a 2.4 per cent weekly gain against the greenback after getting a solid lift on news of a new central bank governor and benefiting from US dollar weakness.
The kiwi was trading at 70.05 US cents as at 5pm in Wellington from 70.01 cents yesterday and up from 68.38 cents a week ago. The trade-weighted index was at 73.85 from 73.76.
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The kiwi pared back some of its recent losses this week when Finance Minister Grant Roberston named NZ Superannuation Fund chief executive Adrian Orr as Reserve Bank governor, starting in late March 2018.
The New Zealand dollar also benefited from the weaker US dollar after the US Federal Reserve lifted interest rates but was less upbeat on inflation.
Tim Kelleher, head of institutional foreign exchange sales at ASB Bank, said while the kiwi has pushed higher it failed to break through 70.25-70.50 US cents "so the trend is still firmly down as far as I am concerned." He said there may be some buyers around 69.50 US cents but it is likely to stick to a very tight range ahead of Christmas.
He said there is little reason to buy kiwi dollars right now, in particular given the US Federal Reserve is expected to keep hiking next year. "There is no way if you have the choice between parking your money in the US dollar or the kiwi dollar at a comparable interest rate, you'd park it in New Zealand," he said.
Kelleher also noted the spread of the bacterial cattle disease mycoplasma bovis will likely weigh on the currency.
Earlier this week, the Ministry for Primary Industries announced four new properties tested positive for the disease, including the first outbreak in the North Island, bringing the total to 12.
So far, around 3,500 animals have been culled and more than 55,000 tests carried out.
Mycoplasma bovis is commonly found in cattle globally, including Australia. It does not infect humans and presents no food safety risk, but can have serious effects on cattle. Kelleher said it will also have an impact on New Zealand's reputation.
That, coupled with a likely drought, means farmer returns won't be improving, he said.
The kiwi dollar advanced to 59.46 euro cents from 59.15 cents late yesterday and traded at 52.14 British pence from 52.11 pence yesterday, The kiwi fell to 78.65 yen from 78.83 yen. It was at 91.35 Australian cents from 91.30 cents late yesterday and at 4.6284 yuan from 4.6278 yuan.
New Zealand's two-year swap rate rose 1 basis points to 2.17 per cent and the 10-year swaps fell 2 basis points to 3.07 per cent.
Some relief that the US markets weren’t weaker after a healthy correction the day before.