WELLINGTON: The New Zealand dollar is heading for 3.5 percent against the greenback as the strength of the US economy was reinforced by Europe’s central bank rolling out a bigger than expected quantitative easing (QE) package to reinvigorate the moribund Euro zone.
The kiwi fell to 75.14 US cents at 5pm in Wellington from 77.88 cents in New York last week. It traded at 75.07 cents and 75.25 cents yesterday. The trade weighted index rose to 77.24 from 77.08 yesterday, and is heading for 3.1 per cent weekly decline.
The program exceeded expectations, which had been built up by the unexpected removal of the Swiss National Bank’s cap on the franc last week and interest rate cuts by the Danish and Canadian central banks this week. The kiwi rose to 66.12 euro cents from 64.83 cents yesterday.
The European Central Bank announced a 60 billion monthly bond buying program in a bid to stimulate the regional economy and stoke inflation.
The US is expected to remain robust with the International Monetary Fund (IMF) predicting growth in the world’s biggest economy this year will outpace most of its developed nation peers.
That’s continued to stoke demand for the greenback, and the Dollar Index, a measure of the currency against a basket of peers, climbing to the highest level since September 2003, and was recently at 94.16.
