New Zealand’s dollar rose against a majority of its 16 major peers after Prime Minister John Key was re-elected with his party’s biggest mandate in 60 years, strengthening his ability to balance the budget.
The so-called kiwi climbed along with Australia’s dollar on speculation European leaders may be working on a fast-track solution to the region’s debt crisis. Both South Pacific nations’ currencies were bolstered as Asian stocks rose for the first time in four days, spurring demand for higher-yielding assets.
“The market liked the clean result and the fact that we’re going to have a stable government for the next three years,” Khoon Goh, head of market economics and strategy at ANZ National Bank Ltd. in Wellington, said about the election. “The market took that very positively and the kiwi has managed to do quite well today.”
New Zealand’s dollar rose 2 percent to 75.52 U.S. cents at 1:46 p.m. New York time. It touched 75.75, the strongest level in seven days after declining a 2.1 percent last week. The kiwi climbed 2.5 percent to 58.92 yen, after earlier reaching 59.18, the highest since Nov. 16.
Australia’s dollar, known as the Aussie, gained 2 percent to 99.10 cents, its biggest intraday gain against the greenback in a month. It advanced 2.4 percent to 77.32 yen.
Hits ‘Ground Running’
Key’s National Party won 48 percent of the vote on Nov. 26, up from 45 percent three years ago, allowing him to form the next government with support from political allies in parliament. His administration will focus on advancing the sale of state assets and returning the budget to surplus by 2014-15 or earlier, the 50-year-old leader said in Auckland after the election.
“He can actually hit the ground running and continue with the policies and approach he was taking before,” Craig Brown, a senior investment analyst at Auckland-based fund manager OnePath, said yesterday. That, he said, “is important given the volatile financial markets that we’re operating in.”
A confidence index for New Zealand rose to 18.3 in November from 13.2 the previous month, National Bank of New Zealand said in a monthly business outlook survey released today. The results are expressed as the percentage of firms expecting an increase less the percentage expecting a decline.
German Chancellor Angela Merkel and French President Nicolas Sarkozy are planning a fast-track stability pact to stem the region’s sovereign debt crisis, Welt am Sonntag reported, without saying where it got the information.
The Aussie and kiwi each rose 1.3 percent against nine developed-nation peers tracked by Bloomberg Correlation-Weighted Indexes; the euro slipped 0.2 percent.
To contact the reporter on this story: Candice Zachariahs in Sydney at email@example.com;
To contact the editor responsible for this story: Rocky Swift at firstname.lastname@example.org