Kiwi dollar unwinds RBNZ rally

The New Zealand dollar dropped a fifth of a cent today as investors walked back a break above 73 US cents after the Reserve Bank of New Zealand’s policy statement last week.

Wednesday, June 2nd 2021, 6:24PM

by BusinessDesk

The kiwi dollar was trading at 72.63 US cents at 3pm in Wellington, down from 72.85 cents yesterday.

Fitch Solutions expects the kiwi to average 74.34 US cents for the remainder of the year as monetary policy in NZ is seen tightening earlier than in the United States, which will put upwards pressure on the kiwi as investors follow higher interest rates.

BNZ Bank has forecast the currency climbing as high as 76 US cents by the end of year, and Westpac Bank said it will hit 75 US cents this month.

Despite these bullish predictions the currency has failed to hold above 73 cents for any extended period of time.

“While we remain optimistic the NZ dollar will outperform moving into the second half of the year, an extension above resistance appears unlikely in the immediate short term,” exchange firm OFX said in a note.

New Zealand shares also traded with a consolidatory tone, edging lower with a mix of stocks advancing and declining.

The S&P/NZX 50 Index fell 22.42 points, or 0.2%, to 12,440.05. Within the index, 15 stocks fell, 28 rose and seven were unchanged. Turnover was $170 million.

Fisher & Paykel Healthcare was again the lead detractor, falling 2.7% to $29.28 as investors reprice the stock after its full-year result cast doubt on future earnings.

On the other side of the board, Kathmandu Holdings jumped another 3.1% to $1.67 – now up 31.5% this year.

Ryman Healthcare dropped 1.9% to $13.05 after Forsyth Barr said it had ditched the stock from its institutional model portfolio in favour of the smaller retirement village operators.

“We like the aged care sector overall, but we are spoilt for choice in NZ,” the analysts wrote.

After a busy month of earnings and index declines, Jarden analysts said June is expected to be a quiet month for stock-specific news.

“We anticipate investor attention returning to macro settings, in particular inflation concerns and related implications for interest rates and the NZ dollar,” they said.

The investment firm is reducing its exposure to property stocks – where it sees limited growth and a high level of interest rate risk – and recycling the capital into energy stocks and Infratil.

In other currency movements, the trade-weighted index was at 75.26 at 3pm, from 75.38 yesterday. The kiwi traded at 72.63 Australian cents from 72.85 cents, 79.61 yen from 79.70 yen, 59.43 euro cents from 59.56 cents, 51.30 British pence from 51.15 pence, and 4.6332 Chinese yuan from 4.6371 yuan.

Tags: Market Close