GDP result boosts demand for NZ dollar

The kiwi rose to 64.49 euro cents overnight from 63.87 cents. Photo / File
The kiwi rose to 64.49 euro cents overnight from 63.87 cents. Photo / File

The New Zealand dollar gained against the greenback and the euro as stronger-than-expected growth figures yesterday made the local economy a standout in a world of sluggish growth and data showed euro-zone manufacturing shrank further.

The kiwi rose to 83.30 US cents from 82.73 cents at 5pm in Wellington yesterday. The trade-weighted index rose to 76.48 from 76.16.

The New Zealand economy grew 1.5 per cent in the fourth quarter, almost twice the pace expected by economists and the central bank and the fastest pace in three years. By contrast, a composite index of purchasing managers in Europe's services and manufacturing industries fell deeper into contraction at 46.5 in March from 47.9 in February, according to Markit Economics.

"The one thing everyone is looking for is growth in any form," said Stuart Ive, currency strategist at HiFX.

Reports that Fonterra Cooperative Group may lift its payout to farmers next week when it announces first-half sales also helped underpin the kiwi, Ive said.

The strength of the kiwi has also been assured by Federal Reserve chairman Ben Bernanke's announcement this week that America's central bank will continue with its US$85 billion a month of bond purchases, with no signal quantitative easing will end.

"He has very much still got the foot on the gas," Ive said.

The kiwi rose to 64.49 euro cents from 63.87 cents. It traded little changed at 79.67 Australian cents and fell to 79.02 yen from 79.31 yen. It gained to 54.84 British pence from 54.67 pence.

- BusinessDesk

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