The New Zealand dollar rose sharply today on news of a raised Fonterra payout, which will be a boost for the economy as well as for dairy farmers.
The NZ dollar jumped from around US70.62c to US71.42c on the news and was US71.65c by 5pm from US70.73c at
the same time yesterday.
Fonterra increased its payout forecast for 2009/10 by 55 cents to $5.10 per kilogram of milksolids, reflecting a more positive outlook in international dairy markets.
The news came shortly after news that the seasonally adjusted current account deficit was $612 million in the June quarter, $1.5 billion smaller than the March 2009 quarter deficit of $2.12 billion.
The improvement was partially due to the $661m tax charge taken by BNZ, which reduced profits to its Australian parent.
"If we were cheeky we would say BNZ has single-handedly alleviated the nation's current account concerns," BNZ economists said in their analysis.
BNZ Capital senior strategist Danica Hampton said the currency got a lift from the current account data but the big move was due to the lift in the Fonterra payout.
"It is quite positive."
She said the market had an interesting backdrop because hard commodity prices were soft but the milkpowder price had been rising at auctions.
Hampton said there were counter forces this week, including the US dollar's performance ahead of a monetary policy meeting by the Federal Reserve this week and a summit of leaders from the Group of 20 later this week.
The US dollar rose on Monday on concerns that short positions were over-stretched ahead of these events.
Gross domestic product data for June quarter is also due to be released in New Zealand tomorrow. If it is a positive number the economy will have emerged from a downturn that has last six consecutive quarters.
The NZ dollar gained against the Australian dollar to A82.41c from A81.69c yesterday.
Against the euro, the NZ dollar rose to 0.4869 from 0.4817 yesterday.
Against the Japanese yen it was up to 65.71, from 64.77 yesterday.
The trade weighted index rose to 65.35 from 64.57 yesterday.
- NZPA
Photo / Kenny Rodger
The New Zealand dollar rose sharply today on news of a raised Fonterra payout, which will be a boost for the economy as well as for dairy farmers.
The NZ dollar jumped from around US70.62c to US71.42c on the news and was US71.65c by 5pm from US70.73c at
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