Stocks, commodities slide as dollar gains on Fed’s easing debate

Kiwi Policy

New Zealand’s dollar, known as the kiwi, surged about 45% against the dollar since the end of 2008, the biggest advance after its Australian counterpart among more than 150 currencies tracked by Bloomberg. The kiwi lost as much as 1.7% today, the most intraday since May. The currency weakened at least 0.3% against all 16 major peers.

New Zealand’s Reserve Bank Governor Graeme Wheeler said today in Auckland that he’s “prepared to intervene to influence the kiwi” and that the currency isn’t a one-way bet.

“It’s interesting that the RBNZ have upped the rhetoric around the potential for intervention,” said Geoff Kendrick, head of European currency strategy at Nomura International Plc in London. “This is the first time Wheeler has laid his cards on the table and talked the currency down.”

The pound slid 1.2% to $1.5243 as Bank of England minutes showed a growing number of policy makers backed expanded asset purchases.

The yen weakened against 13 of 16 major peers. Japan’s Prime Minister Shinzo Abe said in parliament today that the need for a fund that buys foreign debt “is becoming a lot less.” In last year’s election campaign, his Liberal Democratic Party proposed a joint fund operated by the BOJ, the Ministry of Finance and private investors that would buy foreign bonds as a means to end deflation.

Currency Wars

While Group of 20 nation finance ministers vowed to avoid targeting exchange rates, Japan’s leaders have pledged steps to boost the economy that caused the yen to tumble. Policy makers in South Korea and the Philippines are weighing curbs to capital inflows while Brazil intervened this month to halt gains in the real. New Zealand isn’t a member of the G-20.

The MSCI Emerging Markets Index rose 0.2%. South Korea’s Kospi index jumped 2%, the most in five months, and the won strengthened after central bank Governor Kim Choong Soo said the improved global outlook raises the odds that South Korea will beat growth targets. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong rose 1.4%. Brazil’s Bovespa sank 2%, the most since November.

Bloomberg News

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