NEWS / Foreign Exchange

Kiwi dollar hit 22 year high after CPI

Kiwi dollar hit 22 year high after CPI

New Zealand consumer prices rebounded in the first quarter, supporting views the inflation-wary central bank may lift interest rates again and sending the currency to a 22- year high.

Government figures on Wednesday showed the consumer price index (CPI) rose 0.5 % in the January-March quarter, after falling 0.2 % in the previous quarter -- the first fall in prices in six years.

The annual rate edged down to 2.5 % from 2.6 % in the previous quarter, holding below the top of the Reserve Bank of New Zealand's (RBNZ) 1-3 % target band for the second straight quarter.

Analysts said that although the numbers were slightly below market expectations, domestic inflation pressures were strong, and it was a close call whether the RBNZ would raise rates next week.

The New Zealand dollar initially fell around a quarter of a cent to USD 0.7421/31, but quickly rebounded and touched a 22-year high of USD 0.7493.

NZD/USD traded between 0.7418 and 0.7493.

Asian stocks higher

Asian stocks rose on Wednesday, led by exporters such as Canon Inc., after U.S. data showed muted core consumer prices, easing fears over inflation in the world's biggest economy, Asia's top export market. Technology shares rose, including chip-tester maker Advantest Corp., lifted by upbeat results from sector bellwether, U.S. chip giant Intel Corp.

At 0036 GMT Tokyo's Nikkei average had risen 0.7 %, recovering from Tuesday's 0.6 % fall, after Canon Inc. climbed 0.9 %, Advantest rose 1.4 % and industrial robot maker Fanuc added 0.4 %.

Dollar near two-year low versus euro and 15-year low versus sterling

The dollar stayed near a two-year low against the euro on Wednesday after data showing U.S. core consumer prices rose less than expected in March, bolstering the view that the Federal Reserve may be more inclined to cut interest rates this year.

The U.S. currency also continued its weak run against sterling after rising above $2 for the first time since 1992, as UK inflation data reinforced expectations the Bank of England will raise rates next month.

The euro was trading firm at USD 1.3575, little changed from late in New York, after touching a two-year high of USD 1.3595, in sight of a record high of USD 1.3670.

EUR/USD traded between 1.3567 and 1.3593.

GBP/USD traded between 2.0063 and 2.0088.