NZ dollar stalled; Hong Kong latest focus of China worries

Article – BusinessDesk

NZ dollar stalled; Hong Kong latest focus of China worries

By Jenny Ruth

Aug. 13 (BusinessDesk) – The New Zealand dollar was little changed as investors eyed the unrest in Hong Kong amid speculation as to what China may do next after calling anti-government protests the first signs of “terrorism.”

The kiwi was trading at 64.45 US cents at 5pm in Wellington from 64.46 at 8am. The trade-weighted index was unchanged at 71.71 points.

“Currencies have been very quiet. We’re just seeing a little bit of US dollar buying and a little bit of weakness in the euro in the afternoon. People are looking to see whether the Hong Kong situation spirals,” says Tim Kelleher, the head of foreign exchange sales at Commonwealth Bank of Australia.

“We certainly don’t want to see a Tiananmen Square going on,” Kelleher says, referring to a massacre in Beijing in 1989.

“The market is genuinely waiting to see what will happen in Asia later today and tonight.”

One development today was that Air New Zealand has cancelled flights between Auckland and Hong Kong because of the protests which have included occupying Hong Kong’s airport.

The market is also watching for developments in the escalating trade war between the United States and China. China is New Zealand’s biggest trading partner.

Today, Singapore reported its economy contracted 3.3 percent in the June quarter after 3.8 percent growth in the first quarter, a turnaround attributed to the trade war.

Now economists are saying Singapore may be headed for a recession, holding up the heavily trade-dependent island nation as a bellwether for the global trade slowdown.

Adding to China-related angst, Government Communications Security Bureau Minister Andrew Little earlier today cautioned Chinese Telecommunications company Huawei against “heavying the government’’ with threats to leave New Zealand.

Huawei had sent a letter to ministers last month that was leaked to the media. It warned it may leave the New Zealand market if it is unable to participate in the roll-out of 5G technology. Little said he had referred the letter to officials and that it was inappropriate for government ministers to engage with technology suppliers.

Last year, the GCSB rejected a proposal from local phone company Spark to partner with Huawei to deliver 5G because of security concerns.

The New Zealand dollar was trading at 95.37 Australian cents from 95.42, at 53.41 British pence from 53.36, at 57.60 euro cents from 57.49, at 67.94 yen from 67.89 and at 4.5522 yuan from 4.5488.

The New Zealand two-year swap rate edged down to a bid price of 0.9570 percent from yesterday’s close at 0.9647. The 10-year swap rate sank to 1.2675 percent from 1.2950.

(BusinessDesk)

Content Sourced from scoop.co.nz
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