WELLINGTON: The New Zealand dollar gained along with other commodity-linked currencies as prices of raw materials rose and traders speculated the dairy auction tonight will deliver another strong gain for whole milk powder.
The kiwi dollar rose to 72.26 US cents at 5pm in Wellington from 71.75 cents late yesterday. The trade-weighted index climbed to 76.36 from 76.07. Dairy futures suggest whole milk powder will rise about 10 percent in tonight’s auction, adding to a 10 percent gain in the last sale two weeks ago that pushed the price to US$2,265 per tonne, the highest since November 2015.
Dairy, the backbone of New Zealand’s export industries, has been the weak link for an economy that’s enjoying record migration and tourism, a booming property market and relatively robust manufacturing. Also driving the kiwi higher, the Thomson Reuters/CoreCommodity CRB index, a broad measure of prices for raw materials, rose 1.3 percent overnight to the highest level in a month.
“Commodity currencies had a bounce last night, although the kiwi has been pretty well contained in a relatively tight range,” said Mark Johnson, senior foreign exchange dealer at OMF. Should whole milk powder rise as expected at tonight’s GlobalDairyTrade auction, “that could give the kiwi a bit of a boost.”
The kiwi rose to 94.05 Australian cents from 93.79 cents late yesterday as the Reserve Bank of Australia released the minutes of its last policy meeting where it cut the cash rate to a record low 1.5 percent. Johnson said there were no surprises, with the bank saying its rate cut delivered prospects for an improvement in inflation and that a rising Australian dollar complicated the economy’s transition away from its resources base.
