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Thursday, November 21, 2013

Chinese baby talk boosts Kiwi dollar

Good lord, who would have thought that babies that are not even born yet could have impact on anything as mundane as currency?

But the Wall Street Journal reports that the New Zealand dollar has risen on prospects of cradles filling up in China.

The New Zealand dollar, one of the globe's top-performing currencies this year amid a booming economy and high interest rates, is getting a baby bump.

The currency, known as the kiwi, is up 1.2% against the U.S. dollar since Thursday, before China's surprise announcement that it will loosen its policy of one child per family.

Some investors are betting that New Zealand, home to the world's biggest milk exporter, is well positioned to benefit from a baby boom in the world's most populous nation. More Chinese milk demand would translate into more demand for the kiwi from Chinese importers, which money managers anticipate will boost the currency's value.

"New Zealand exports milk products, which is what China needs and wants," said Anders Faergemann, who helps manage $69.1 billion at PineBridge Investments and is buying the New Zealand dollar. Mr. Faergemann said that it is likely that a relaxation of China's one-child policy will result in more demand for New Zealand's products over time.

"If you can export more to a growing country the size of China, your currency is in a good spot," he said.
The kiwi wasn't the only asset to benefit from the policy change: In China, shares of baby-formula producers, piano makers and tutoring companies jumped following the news.

Piano makers?  Good lord, again.

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