The New Zealand dollar jumped half a cent on Thursday after rating agency Standard & Poor's revised its outlook on the currency to stable as the government unveiled its 2009/10 budget. The kiwi dropped about a quarter of a cent after the budget announced, before bouncing to a high of $0.6194.
Standard & Poor's said the budget would support stabilisation in the government's fiscal position over the medium term. The budget raised borrowing levels and will lead to a decade of deficits as it aims to revive the recession hit-economy while keeping debt under control. The Standard & Poor's announcement took away one of the main negative risks hanging over the kiwi, analysts said.
"That is good news for the country and should help see our bond yields head down a bit, the unfortunate side effect is that it's also sent the New Zealand dollar higher and will make the rebalancing process for the economy that little bit harder," said ANZ-National Bank senior economist Khoon Goh. The kiwi held most of its gains to stand at $0.6180/85, compared with $0.6218/21 in late local trade on Wednesday.
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