The New Zealand dollar firmed today on the back of yet more yield demand from Japanese investors.
The Inter-American Development Bank announced today it was selling $761 million of two-year uridashi bonds. This brings the value of uridashi issuances announced over the past 24 hours to $1 billion.
Uridashis are foreign currency bonds, in this case New Zealand dollar denominated bonds, sold to retail Japanese investors who are seeking to take advantage of New Zealand's high interest rates.
At 7.25 per cent, New Zealand has the highest official cash rate in the developed world. This has underpinned the currency, despite the huge current account deficit and other data pointing to an economic slowdown.
Kiwi-denominated uridashi have remained popular despite a visit by Reserve Bank officials to Japan last year to try to deter Japanese institutions from further issuances.
By 5pm today the kiwi was fetching US66.47c, from US66.28c at the same time yesterday.
Against the Australian dollar, the kiwi was buying A89.23c, from A89.24c at 5pm yesterday.
Meanwhile the US dollar firmed against most other major currencies after manufacturing data came in better than expected.
The Institute for Supply Management's manufacturing index for February came in above economists' consensus forecast, countering a tepid US core inflation index for January that had triggered a mild US dollar sell-off.
The ISM index rose to 56.7 in February, above economists' consensus forecast for 55.6 and higher than January's 54.8 reading.
The US manufacturing report countered a tepid US core inflation index for January, which had triggered a mild dollar sell-off.
The core personal consumption expenditure index (PCE) -- a gauge the Federal Reserve watches closely -- rose 0.2 per cent in January, in line with forecasts. But on an annual basis, the index dipped to 1.8 per cent from 1.9 per cent in December.
5pm today 5pm Wednesday
NZ dlr US66.47c US66.28c
NZ dlr/Aust dlr A89.23c A89.24c
NZ dlr/euro 0.5576 0.5551
NZ dlr/yen 77.26 76.68
NZ dlr/stg 38.00p 37.77p
NZ TWI 68.27 68.02
Australian dollar US74.53 US74.28c
Euro/US dollar US1.1920 US1.1942
US dollar/yen 116.23 115.69
- NZPA
<EM>Currency:</EM> Asian demand underpins kiwi
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