NZ dollar gains as yen falls to 7-year low vs. greenback
The New Zealand dollar rose as the yen fell to a seven-year low against the greenback as stimulus from the Bank of Japan and the prospects that Prime Minister Shinzo Abe will win a snap election and extend his economic strategy sapped demand for the currency.
The kiwi rose to 92.74 yen as at 5pm in Wellington, from 92.26 yen yesterday. The New Zealand dollar fell to 78.33 US cents from 78.70 cents.
The Bank of Japan has maintained its massive stimulus program in the wake of data confirming the economy is in recession, which is now widening Japan's monetary base by about 80 trillion yen a year. An economy in recession and the likelihood that Abe will win a new mandate for unpopular economic policies are likely to continue to weigh on the yen, currency strategists say.
"We see very little reason to challenge the yen's current policy-driven trajectory," strategists at UBS said in their FX Perspectives report. "We believe that Bank of Japan resolve should not be in doubt, nor should the risk of material portfolio outflows from Japan be dismissed."
They said they concurred with those projecting "healthy gains" for the US dollar in 2015.
The kiwi didn't move much after a gauge of Chinese manufacturing fell to a six-month low this month.The preliminary Purchasing Managers' Index from HSBC Holdings Plc and Markit Economics was at 50, lagging a forecast of 50.2 in a Bloomberg survey. New Zealand figures showed producer input prices fell in the third quarter, mainly driven by lower input costs for dairy manufacturers as the price of milk fell.
The New Zealand dollar rose to 91.19 Australian cents from 90.79 cents yesterday and fell to 62.46 euro cents from 62.89 cents. It fell to 50 British pence from 50.42 pence. The trade-weighted index fell to 78.02 from 78.17 yesterday.