Kiwi gives up gains as USD comes back




The New Zealand dollar has given up earlier gains as Federal Reserve chair Janet Yellen played a straight bat in her final policy review, keeping rates on hold while adding emphasis on plans to raise US interest rates.

New Zealand currency fifty dollar note money

New Zealand currency fifty, dollar note (file picture).


The kiwi fell to US73.53 cents as at 8am today in Wellington from as high as US74.19c overnight, and down from US73.77c on Wednesday. The trade-weighted index declined to 74.84 from 75.09.

The Federal Open Market Committee was unanimous in keeping the federal funds rate in a range of 1.25 per cent to 1.5 per cent, with Yellen saying the central bank "expects that economic conditions will evolve in a manner that will warrant further gradual increases in the federal funds rate".

Jerome Powell will take over the chair from Saturday and be sworn on two days later. The greenback has been out of favour despite the prospect of higher US interest rates, but traders expect the world's reserve currency will attract buyers when rate differentials start favouring the US.

"There was a little bit about inflation but nothing to rock the market too much," said OMF senior forex dealer Martin Rudings.

"There's been a little bit of relief for the US dollar."

A lot of the greenback's recent weakness has been about market positioning, with some investors more enamoured with Europe's plans to wind back quantitative easing, Mr Rudings said.

Today, the kiwi was little changed at 91.33 Australian cents from A91.36c on Wednesday after getting a boost from slightly weaker-than-expected inflation data across the Tasman.

It fell to 4.6209 Chinese yuan from 4.6614 yuan and traded at 80.39 yen from 80.33 yen. It rose to 59.82 euro cents from 59.37c and edged down to 51.90 British pence from 52.03p.

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