New Zealand Dollar Gains as U.S. Currency Eases Recent Gains

By Candice Zachariahs

Aug. 13 (Bloomberg) -- The New Zealand dollar rose against the U.S. currency, which gave up recent gains against 10 of the 16 most-traded currencies yesterday.

New Zealand's currency has lost 4.8 percent against the U.S. dollar this month as traders bet that the Reserve Bank of New Zealand will pare interest rates. The bank cut its benchmark rate by a quarter-percentage point on July 24, the first reduction in five years. The U.S. currency halted six days of gains against the euro yesterday, falling from a 5 1/2-month high.

New Zealand's currency rose 0.1 percent to 69.61 U.S. cents at 8:58 a.m. in Wellington, from 69.56 cents in late Asian trading yesterday. It bought 76.07 yen, from 76.67 yesterday.

``It's part of a broader theme where we've seen the U.S. dollar consolidate its recent gains,'' said Matthew Strauss, a senior currency strategist at RBC Capital Markets Inc. in Toronto, a unit of Canada's biggest bank by assets. ``Less than a month ago, the kiwi was trading at 76 cents and now we're talking 70.''

New Zealand's dollar was the third-worst performer of the 16 most-traded currencies over the past month, after the South African and Australian currencies. Investors have increased bets that the Reserve Bank will reduce the 8 percent benchmark rate by 1.49 percentage points over the next 12 months according to a Credit Suisse Group index based on overnight swaps trading yesterday.

Sales of New Zealand houses fell 33 percent from a year ago in July, a report from the Real Estate Institute of New Zealand Inc. said yesterday.

To contact the reporter on this story: Candice Zachariahs in New York at czachariahs1@bloomberg.net