NZ dollar soars against raft of currencies
The New Zealand dollar soared to an all-time high against a basket of major trading partners' currencies overnight, and there is little the Reserve Bank can do to stop exporters feeling the pain.
The kiwi recently traded at US84.71 cents, holding on to most of its gains from US84.74c at 5pm yesterday.
On the Trade Weighted Index of major trading partners' currencies it rocketed to a new all-time high of 77.30, before settling to 76.90 this morning.
''All the currency pairs are pretty high,'' ASB Institutional head of FX sales Tim Kelleher told Fairfax.
The kiwi-aussie cross is at a two-year high, the kiwi-sterling is at all-time highs, and the kiwi-yen is at a five-year high.
''It's a combination of factors, and obviously all on the back of that stronger data yesterday,'' Kelleher said.
Yesterday the BNZ-BusinessNZ Performance of Manufacturing Index rose to 55.2 points, up almost five points from December, and at its highest point since May 2012.
The encouraging manufacturing data was driven by a pick-up in construction activity, reaffirming the comparatively rosy state of the New Zealand economy.
''Ordinarily we probably wouldn't jump on that sort of data, but there's a bit of a catch-up,'' Kelleher said.
He said the Reserve Bank would be concerned about the high TWI, because it made life difficult for exporters across the board.
''But they sort of know it's out of their hands,'' he said.
''The whole point of intervention is there's got to be a chance for it to work.
''As [finance minister Bill] English came out on Tuesday and said, he's not going to spend taxpayers' dollars on intervention when it's pointless.''
On the crosses, the kiwi recently traded at A81.92 cents and 78.84 Japanese yen, down from 79.16 yen at 5pm yesterday. It opened at 63.48 euro cents, up from E63.02c yesterday, and rose to 54.72 pence from 54.60p.
Kelleher said the kiwi would definitely find sellers above the US85c mark on the day.