26 Feb 2014

NZ dollar up slightly against Australian

7:16 pm on 26 February 2014

The New Zealand dollar was slightly stronger against the Australian dollar but little changed against the currencies of the country's other major trading partners on Wednesday.

ASB Bank head of external foreign exchange sales Tim Kelleher says manipulation of China's currencies is worrying investors.

He says the People's Bank of China is engineering the value of the yuan, trying to get the offshore and onshore rates closer together.

Mr Kelleher says there is speculation that China will widen the trading bands and that this is a precursor to that.

He says a sell-off in the yuan is hanging over the Australian dollar and the Australian dollar is used as a proxy for the Chinese yuan.

"A lot of people who can't get access to that currency use the Australian dollar as proxy to be long or short of the currency instead and that overhangs into the Kiwi to a certain extent."

About 5pm on Wednesday, the Kiwi was trading at 92.48 Australian cents, up from 92.29 cents at that time on Tuesday.

It was also trading at 83.32 US cents, 49.95 British pence, 0.6062 euro and 85.23 yen.

Sharemarket little changed

The sharemarket was little changed, the benchmark Top 50 Index nudging up 6 points to 4973.

Devon Funds Management energy analyst Phill Anderson says Mighty River Power's first-half result was initially well-received by the market.

He says initially the market was happy that Mighty River had managed to hold onto its prospective full-year earnings forecast despite a challenging year in terms of rain flow around the Taupo area.

Mr Anderson says when Mighty River misses out on rain in that area, as it has done in the last six months, it's quite a strong headwind for earnings in the company.

He says later in the day Finance Minister Bill English made an announcement about Genesis Energy, a company which looks very similar to Mighty River and early indications are that that might be priced quite attractively.

Mr Anderson says when there is a lot of supply for similar looking companies it could lead to headwinds for others in the sector.

Mighty River Power shares rose as high as $2.07.5 but ended the day at $2.02, down 2 cents.

Tourism Holdings shares rose 14 cents, or more than 13 percent, to $1.19 after the company reported a dramatic turn-around in half-year profit, turning last year's $500,000 loss into a $2.5 million gain.