Kiwi, Won Win October as Krona, Franc Trail Among Top Currencies

  • New Zealand currency benefits from major central bank stimulus
  • Euro has biggest drop since May on ECB easing speculation

The New Zealand dollar is the big winner this month in the $5.3-trillion-a-day foreign exchange market.

The kiwi gained 5.6 percent, the most in two years, leading advances against the dollar as it rode a rally along with high-yielding currencies. Raw-material exporters strengthened after central banks in Europe and Japan said they would continue their unprecedented monetary-easing policies.

The kiwi’s rise might not last. Milk futures contracts are hinting at renewed weakness in New Zealand and the country’s central bank said Wednesday that it will likely have to further reduce its benchmark interest rate on concern that Chinese demand for imports will extend a slowdown.

The South Korean won posted the second-best performance versus the dollar, which was dragged down as investors weighed whether the Federal Reserve will increase the U.S. benchmark interest rate this year. The won rose 3.9 percent against the greenback, its first monthly gain since April.

The Bank of Korea unanimously decided to maintain its benchmark interest rate at its policy meeting this month, while officials were quick to note that domestic demand, including consumption and construction investment, is picking up.

Europe Down

European Central Bank President Mario Draghi sent European currencies skidding after he said this month that policy makers would consider extending quantitative easing measures through September 2016 and beyond. The euro weakened 1.5 percent against the dollar, the biggest monthly drop since May.

The 19-nation region is battling a global economic slowdown that is weighing on overseas sales. Consumer prices fell in September and officials worry that decline may become entrenched.

The Swiss franc slid 1.6 percent against the greenback this month, its fourth consecutive loss, as Swiss National Bank officials kept interest rates negative at their last policy meeting and reiterated their threats to sell francs if needed to keep the currency in check.

The Swedish krona dropped 1.7 percent against the dollar this month, its first loss since July. The nation’s Riksbank boosted bond-buying for the fourth time since February on Wednesday amid talk of additional easing from the ECB.

The country’s bigger-than-forecast jump in unemployment sparked the krona’s losses this month, but policy makers at the world’s oldest central bank said it’s the currency’s overall gains this year that are causing woes in Scandinavia’s biggest economy.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE