The Kiwi continued its appreciation versus other currencies on Thursday, after data showed the country has logged a massive trade surplus in February that surpassed analysts' predictions and reinforced a view the economy is building up steam. The currency advanced 0.5% against its U.S. counterpart, with NZD/USD trading at 0.8631, almost this year's high.
The main reason for another rally is $818 million February trade surplus, as shipments of primary-industry goods, especially to China, rose further. The figure is significantly higher than January's revised $286 million surplus and stronger than the $600 million projected by the market. Exports soared $663 million to $4.56 billion, driven mostly by primary product exports. While the latest data from China raised some concerns about future prospects of the world's second largest economy, a $388 million increase, or almost 50%, in exports to China is diminishing these fears. At the same time, Statistics New Zealand said imports climbed 8% over the same period.
While fundamentals are supporting another rate hike and stronger Kiwi, Finance Minister Bill English warned that recent performance of the Kiwi is posing a significant challenge for the nation's exporters, making their products less competitive globally.
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