NEW YORK: The New Zealand dollar gained against its Australian counterpart on sliding prices for iron ore exported to China, that nation’s biggest market, while traders await a speech by US Federal Reserve chair Janet Yellen on Friday in the US.
The kiwi rose to 97.13 Australian cent as at 5pm in Wellington, from 96.98 cents yesterday. It was little changed at about 75.80 US cents.
Iron ore sank to a record low US$54.20 a tonne this week and has more than halved in the past 12 months amid a supply glut, according to Reuters, which reported today that capacity utilisation rates at small Chinese iron ore mines fell as low as 20 percent at the end of last year. Concern about weak iron ore prices weighed on the Australian dollar and also restrained the kiwi against the greenback, traders said.
The drop in iron ore “is weighing on the Aussie, given that it’s a key export,” said Michael Johnston, senior trader at HiFX. “It is symptomatic of a slowdown in China.”
He said fair value for the kiwi against the Australian dollar “is a good chunk lower than where we are now” but the two currencies could still get to parity “given the Reserve Bank of Australia is cutting rates and the RBNZ is firmly on hold.”
