N.Z. Current Account Deficit Narrows

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New Zealand's current account balance narrowed sequentially in the March quarter, with the decrease driven by a rise in exports and a fall in the investment income deficit, Statistics New Zealand said. However, the shrinkage in the deficit was much less than what economists had expected.

The nation recorded a seasonally adjusted current account deficit of NZ$1.29 billion in the March quarter, which is NZ$1.63 billion smaller than the December quarter deficit of NZ$2.92 billion. Economists had expected a NZ$0.55 billion shortfall. A current account deficit means that New Zealand's overseas expenditure is greater than its earnings abroad.

The surplus in the goods account stood at a seasonally adjusted NZ$919 million in the March quarter, an increase of NZ$624 million compared to the December quarter. This marks the biggest goods surplus since the June 2001 quarter. Exports of goods surged NZ$1.22 billion mainly due to higher prices for dairy products. At the same time, imports of goods increased NZ$595 million.

At the same time, the services balance recorded a deficit of NZ$146 million in the March quarter, up from a NZ$24 million deficit in the prior quarter. This was mainly due to a fall in exports of services combined with a rise in imports. Travel services exports, which measure expenditure by foreign tourists in New Zealand, fell NZ$47 million from the December quarter.

The investment income deficit stood at a seasonally unadjusted NZ$2.27 billion in the March quarter, a NZ$989 million decrease from the December quarter deficit. The smaller income deficit this quarter was mainly due to unusual tax transactions that reduced the profits of foreign-owned banks in New Zealand.

Inflows of current transfers into New Zealand were NZ$170 million in the March quarter, NZ$97 million higher than in the December quarter. This was due to an increase in non-resident withholding tax received, Statistics NZ said.

For the year ended March 2010, New Zealand recorded a current account deficit of NZ$4.5 billion, which amounts to 2.4% of gross domestic product. This compares to a current account deficit of NZ$14.6 billion or 7.9% of GDP for the year ended March 2009.

The capital account balance, which measures the value of assets transferred by migrants into, and out of, New Zealand, recorded a deficit of NZ$88 million in the March quarter. This was a NZ$43 million increase from the December quarter deficit.

Meanwhile, the financial account logged a surplus of NZ$87 million in the March quarter. This was the result of NZ$1.22 billion withdrawal of New Zealand investment abroad slightly exceeding a NZ$1.13 billion withdrawal of foreign investment in New Zealand.

At the end of the March quarter, New Zealand's net international debt position was NZ$166.7 billion or 88.9% of GDP, NZ$1.6 billion smaller than the December quarter position. This was due to a NZ$1.3 billion decrease in net international equity liabilities. (Provided by RTTNews)

Australian Dollar Recoups Some Recent Losses Against Majors

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The Australian dollar that declined against other major currencies in early Asian deals on Wednesday recouped some of its losses shortly. The aussie thus recovered from a 5-day low against the greenback and the yen and a 2-day low against the euro and the kiwi.

At present, the aussie is worth 1.2395 against the kiwi, 79.02 against the yen, 1.4064 against the euro, 0.8983 against the loonie and 0.8729 against the greenback. (Provided by RTTNews)