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The New Zealand dollar falls into speculation on the stimulus measures of the Bank of Japan
rising bond yields
By Paul McBeth
July 24
(BusinessDesk) – The New Zealand dollar has gone up
speculation that the Bank of Japan will adjust its extraordinary
stimulus program pushed up yields on US government bonds and
Chinese authorities have added more support to lenders.
The
kiwi fell to 67.82 US cents at 8 am in Wellington from
68.14 cents yesterday. The trade-weighted index was at 73.01
from 73.10 yesterday.
10-Year US Treasury Bill yield
increased by 7 basis points to a monthly high of 2.96%
investors weighed the impact of a new political framework
for the Bank of Japan, who bought the government
bonds as a way to agitate inflation in the world
third largest economy. The central bank of Japan may review
framework controlling its yield curve to make it more
sustainable, according to media reports. The kiwi was traded to
75.57 yen from 75.60 yen yesterday.
"Japanese
institutions are major investors in global fixed income
markets (looking for higher returns than those available
in Japan), and so the market is very sensitive to everything
potential changes that could prompt them to go back
JGB (Japanese government bonds), "Bank of New Zealand
Interest rate strategist Nick Smyth said in a note.
Meanwhile, the People's Bank of China injected 502
billion yuan in its market thanks to a medium-term loan
ease, giving Chinese lenders greater liquidity
let them borrow from the central bank. The PBoC has been
the decline in the yuan reference rate and
greater support to lenders as the second largest in the world
the economy is slowing down, which has also been seen as a way to limit
the fallout of a trade war with the United States. The yuan has
fell 6 percent against the greenback in the last month.
The kiwi was traded at 4.6068 yuan against 4.6053 yuan yuan
yesterday.
"The weakness of the CNY has added some declines
pressure on the AUD and the NZD, with both currencies
drop of about 0.5 percent overnight (the weakest
the currencies of the day), "said Smyth.
No local data is available
scheduled for today. Through the Tasman, investors will be
look at the trust of Australian consumers. The kiwi was traded to
91.83 Australian cents against 91.77 cents yesterday.
The
the local currency was trading at 58 euro cents against 58.08 cents
yesterday and fell to 51.75 British pence from 51.84
pence.
(BusinessDesk)
Ends
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