Article – BusinessDesk
NZ dollar rises to 7-year high vs. yen as Abenomics stimulus seen continuing
By Tina Morrison
Dec. 30 (BusinessDesk) – The New Zealand dollar rose to a seven-year high against the yen after the Japanese government approved a stimulus package at the weekend that weakened its currency.
The kiwi touched 94.05 yen, its highest level since July 2007, and was trading at 93.91 yen at 8am in Wellington, from 93.47 yen at 5pm yesterday. The local currency tested 78 US cents overnight, touching a high of 77.99 cents, and was recently trading at 77.80 cents from 77.56 cents yesterday.
The yen weakened after Japan’s government on Saturday approved stimulus spending worth 3.5 trillion yen in planned subsidies, merchandise vouchers and other measures in an attempt to boost gross domestic product by 0.7 percent. The measures come two weeks after the re-election of Prime Minister Shinzo Abe’s coalition gave him a fresh mandate to push through his ‘Abenomics’ stimulus policies.
“Abe has been given a mandate by the electorate to keep going which means ‘Abenomics’ continues and that means continued stimulus and continued weakness for the yen,” said Kevin Morgan, senior dealer foreign exchange and derivatives at OMF in Auckland. “Even though the fundamentals for the New Zealand dollar may be coming off the boil slightly, we expect weakness in the yen to continue.”
The New Zealand dollar touched a fresh nine-year high of 95.73 Australian cents as traders eschew the Aussie on the expectation waning demand for its commodities may prompt the central bank to cut interest rates. The kiwi was trading at 95.60 Australian cents at 8am from 95.40 cents yesterday.
The local currency touched a three-month high of 64.05 euro cents, and was recently trading at 64 cents from 63.65 cents yesterday. Greece yesterday failed to elect a new president, prompting the country into an early national election that could derail its bailout programme.
The kiwi reached a four-week high of 50.20 British pence and was recently trading at 50.10 pence from 49.82 pence yesterday. The trade-weighted index gained to 79.12 from 78.86 yesterday.