NZ Dollar Rises On Stronger Chinese Data

24 July 2012 03:00 - Lucy Williams

NZ Dollar Rises On Stronger Chinese Data

Statistics recently released by the New Zealand Treasury show a rebound in economic growth as a result of increasing gross domestic product gains. Analysts forecast economic growth to continue for the remainder of the year.

Thanks to improving Chinese manufacturing and a strengthening Australian economy the New Zealand dollar finally appears to be rising after falling to a near two-week low after the yield on Spanish 10-year government bonds rose to record highs. The New Zealand central bank will most likely keep the benchmark interest rate unchanged after meeting this Thursday to review the official cash rate. New Zealand’s central bank has been advised by the New Zealand shadow board, which was set up by the New Zealand Institute of Economic Research, to leave the official cash rate unchanged at 2.5 percent.

Recent data showed a gentler rate of contraction in Chinese manufacturing suggesting China’s economy hopefully won’t face as harsh a slowdown as expected. New Zealand and neighbouring Australia too, has a stake in the economic success of China as one of the country’s largest and most important trading partners. If Chinese manufacturing does continue to improve this month the New Zealand dollar should also continue in this trend. An upbeat speech given by RBA’s governor Glenn Stevens which praised Australia’s economy contributed to the rallying of the New Zealand dollar and increased optimism for economic recovery. Incidentally the Australian dollar rose by 0.2 percent against the US dollar in the NZ trading session.