July 14 (Bloomberg) -- New Zealand’s dollar strengthened to a record versus its U.S. counterpart after the economy grew at a faster pace than central bank had forecast, signaling the nation is recovering from a deadly earthquake in February.
The currency, nicknamed the kiwi, advanced against all of its 16 most-traded peers after the increase in gross domestic product boosted speculation the Reserve Bank of New Zealand will raise interest rates this year. Australia’s dollar fell versus the greenback as a report showed expectations for home prices declined.
New Zealand’s data “showed the economy probably had more momentum in it than possibly expected around the time of the earthquake,” said Grant Turley, a senior currency strategist in Sydney at Australia & New Zealand Banking Group Ltd., Australia’s third largest lender by market value. “It’s going to be another positive for the kiwi.”
New Zealand’s dollar rose 0.8 percent to 84.38 U.S. cents at 11:40 a.m. in Sydney, from 83.74 yesterday. It reached 85.07 cents, the strongest level since it was freely floated in 1985. The currency gained 1.1 percent to 66.84 yen, from 66.14.
Australia’s dollar dropped 0.2 percent to $1.0735, from $1.0758, after advancing earlier to $1.0802, the highest level since May 11. The Aussie was little changed at 85.02 yen.
New Zealand’s economy expanded 0.8 percent in the three months ended March 31 from the previous quarter, the government statistics agency said in Wellington. The central bank forecast growth of 0.3 percent.
Reserve Bank Governor Alan Bollard said last month the pace and timing of increases in interest rates will be guided by the speed of the recovery.
Australian home prices fell 2 percent in the second quarter and rental growth slowed to 1.3 percent, according to a National Australia Bank Ltd. survey released today. Prices are expected to decline 1.4 percent over the next year, compared with growth of 0.5 percent predicted in the bank’s March quarter survey.
--With assistance from Joe Ragazzo in New York and Victoria Batchelor in Sydney. Editors: Greg Storey, Dave Liedtka
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