21 Feb 2014

Dollar stronger on overseas weakness

7:01 pm on 21 February 2014

The New Zealand dollar is stronger thanks to what one economist describes as a two-way tussle involving weakness in a number of other markets.

ANZ senior foreign exchange strategist Sam Tuck said there was weakness in Chinese and European manufacturing activity to complement the weakness from the regional Federal Reserve survey, as activity was slowing in the United States at the moment. However, the latter could be distorted due to bad weather.

"That debate is relatively interesting for the prospects for New Zealand. Our domestic economy is clearly going very well, and we're insulated to certain degree from global slowdowns by domestic strength," Mr Tuck said.

"The New Zealand dollar is either going to reflect the safety of that currency due to its high yield and its strong internal prospects or might recouple as a global risk instrument if global slowdown accelerates. So for the moment, the New Zealand has found favour but we're watching quite closely."

Just after 5pm, the New Zealand dollar was trading at 83.06 US cents, 92.36 Australian cents, 49.88 pence, 0.6053 euro and 85.11 yen.

Meanwhile, the NZX Top 50 Index gained 18 points to 4928, despite Telecom shares falling 4 cents to $2.37.