NZ dollar hits three month high

The New Zealand dollar hit 63 cents against the US dollar today, the first time the kiwi has been that high against the greenback since August.

Thursday, December 1st 2022, 6:49PM

by BusinessDesk

Independent treasury adviser Peter Cavanaugh thought the currency move was because of the less-than-hawkish comments Federal Reserve chair Jerome Powell had made during a speech in Washington yesterday.

“I don’t want to overtighten,” Powell had said, adding that the time for moderating the pace of rate increases could come “as soon” as the Fed’s December meeting.

“You could also read [into it] that he's been given a copy of the Adrian Orr guide to raising interest rates and creating a recession,” Cavanaugh said.

He said it was “strange” to see a big currency move immediately after Thanksgiving, but events in the past two-and-a-half years had shown “old patterns don’t really apply any more”.

“Whatever it was, the market said, 'Oh, that's good, we'll sell the US dollar, we'll buy shares and what else will we do? We'll buy bonds, as well'.”

The NZ dollar was also up against the Australian dollar today at 92.85 Australian cents, the highest it’s been in more than eight months.

On the equities front, the S&P/NZX 50 Index rose 102.5 points, or 0.9%, to 11,654.56.

Turnover on the main board was $168.1 million.

Mark Lister, Craigs IP investment director said NZ’s market was performing well on the back of the positive moves of global markets.

He said that there was optimism around the inflation peak being over – or at least central banks considering slowing down the pace of interest rate hikes.

“The NZ market is probably in good heart at the moment because of strong leads from the US and hopes of a move toward reopening in China,” he said.

He pointed to A2 Milk being up 2.1% to $6.79 today and agribusiness group Scales Corp rising 5.5% to $4.62 as a sign of the growing optimism around China.

Lister agreed that the NZ-US cross had a “big bounce” after sinking to 55 cents back in September, but the NZ dollar was now back up to the levels it’d been sitting at in August.

“It’s as much about the US dollar softening as it is about the kiwi dollar rallying,” he said.

Health manufacturer Fisher & Paykel Healthcare was up 3.1% to $24.32, which Lister said had helped pull NZ’s market higher. Gentrack didn’t quite achieve the 24% jump that the software developer’s shares had yesterday, but still rose 2.9% to $2.45 today.

Air NZ was also up 1.9% to 78.5 cents and Auckland International Airport edged up 1.2% to $8.135.

Local importers like The Warehouse and Briscoes Group were down 0.3% to $2.92 and up 0.8% to $4.89.

In a report by Forsyth Barr analysts about fellow retailer KMD Brands, the sharebroker said the company had undergone a “transformation from a single-brand retailer to a global brand owner”.

“While macroeconomic headwinds are clearly present, KMD should be in a better position to face these challenges than at any other point in its history,” analysts Margaret Bei and Andy Bowley said.

KMD was down 0.9% to $1.09. Pacific Edge and Eroad, two stocks with strong business in the US were down 3.3% to 44.5 cents and 2.4% to $1.22.

Tags: Market Close