NEW ZEALAND-NEGATIVE FIGURES.
A strongly negative GDP figure couldn’t derail the strong rise in the New Zealand dollar going into the weekend.
GDP fell by 0.9% in the three months ended December 31, but the market had expected a slightly worse figure (1.1%), said Deutsche Bank NZ senior economist Darren Gibbs.
"It’s a lagged figure, as we’re already at the end of March, and people are trying to look forward to see where the economy might be next year, so there was no impact on the market.’’
The kiwi dollar has firmed appreciably in the last few weeks, as investors have judged that the economic problems here are not as bad as in the major economies, the United States, Japan, and the Euro bloc.
Gibbs said he was surprised at the strength of the kiwi, but not at the direction it had taken. It could go higher still in the short term. There had been some improvement in commodity prices and a rally on world sharemarket, both of which were confidence-boosting factors supporting smaller, higher yield currencies like NZ.
Late on Friday morning, the dollar was at US$0.5768, up from 0.56 a week earlier and about 0.50 at the start of March. It also moved high on the other big cross rates for the farming sector - to E0.4262, stg0.3990, and Y56.93.
Gibbs said the GDP figure for the March quarter would be negative, in the minus 0.8% range, but the market would be looking for positive growth by the end of the year.
New Zealand’s current account deficit, at 8.9% of GDP, remained high, but was expected to reduce over the year, and low world interest rates meant the deficit could be serviced more cheaply. This was positive for the country’s credit rating and currency stability.