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18 Mar 2018 5:18
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  •   Home > News > Business

    Kiwi holds gains ahead of US funding bill

    The NZ dollar held onto some of its gains on Friday as traders await the progress of a bipartisan funding bill in the US to keep the federal government open.

    The New Zealand dollar held onto some of its gains on Friday.

    This comes after it weakened Thursday when the Reserve Bank kept rates on hold as traders await the progress of a bipartisan funding bill in the US to keep the federal government open.

    The kiwi traded at US72.12c as at 5pm in Wellington from 71.90c late Thursday to be down 1.2 per cent from 73.02c a week ago.

    The US funding bill had hit late hitches in the Senate and a result was expected within hours, said Mark Johnson, a senior dealer at OMF.

    "The US dollar is the absolute key to direction. The Fed is still in rate-hiking mode and the Reserve Bank isn't. At the moment the kiwi is holding up but the interest rate differential will argue in favour of the US."

    Acting RBNZ governor Grant Spencer underlined how New Zealand and the US are out of sync in monetary policy this week by reiterating that "monetary policy will remain accommodative for a considerable period".

    It was a message echoed by his Australian counterpart, with RBA governor Philip Lowe saying overnight it was too soon to contemplate raising Australian interest rates.

    "Neither is in a hurry," Mr Johnson said. The message is "they don't need to walk in lockstep with other central banks" which are in hiking mode.

    The kiwi rose to A92.69c from 91.99c.

    The kiwi traded at 51.75 British pence from 51.77 pence Thursday.

    Bank of England policymakers said monetary policy "would need to be tightened somewhat earlier and by a somewhat greater extent over the forecast period than anticipated at the time of the November report".

    The local currency increased to 4.5643 yuan from 4.5308 yuan and was little changed at 78.63 yen from 78.62 yen. It rose to 58.85 euro cents from 58.57c.


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