Dollar reaches two-year high at US96c, Shares post good gains: Economy Roundup

The Australian dollar has continued to rise, breaking through the US96c barrier overnight to reach a two-year high. The dollar is now at its highest point since it reached US97.92c in July 2008.

Economists said the boost came from durable goods data in the US, while many believe the dollar could reach parity sometime during 2011.

The upward momentum may continue, with economists also predicting the Reserve Bank of Australia will increase interest rates by 0.25 percentage points next week to 4.75%.

Chemicals group Nufarm has said it has reached loan covenant waivers from its lenders following a blow-out of its debt, but also said it would pay no dividend for the year to 31 July.

The company announced the waivers are for covenants for periods ending 31 July and 30 October. The company was placed in a trading halt ahead of the announcement.

“The agreement includes an undertaking by Nufarm to provide security over its assets. Some of that security has been provided under the documentation signed today, with further documentation to be arranged through the period to mid-December,” the company said.

Managing director Doug Rathbone said in the statement the company will be working with its lenders to create a more efficient long-term banking structure. He hopes that structure to be finalised by December.

In a statement to the Australian Securities Exchange, Wesfarmers-owned hardware giant Bunnings has said it will invest over $600 million in building 18 new stores over the next three years in New South Wales.

The company said the move would add over 2,700 permanent jobs, adding that it had already secured the locations for 12 of the new stores. They are located in Alexandria, Balgowlah, Batemans Bay, Castle Hill, West Gosford, Rouse Hill, Tamworth, Marsden Park, Wallsend, Smithfield and East Gardens.

“Our NSW opening program is part of our ongoing network expansion strategy across the country,” Bunnings managing director John Gillam said in a statement.

“We are particularly excited about the strength and complementary nature of the sites we have secured which are enabling us to accelerate our NSW opening program.”

Shares higher after solid Wall Street lead

The Australian sharemarket has opened higher this morning following a solid lead from Wall Street last week, during which the Dow Jones hit a four-month high.

The benchmark S&P/ASX200 index was up 68.9 points or 1.50% to 4670.8, while the Australian dollar was staying at US95.8c at 12.15 AEST.

ANZ shares were up 2.2% to $24.11, while Commonwealth Bank shares were also up 1.7% to $52.69. NAB shares gained 1.8% to $26 as Westpac rose 1.7% to $23.90.

The Government is hoping to join with coalition MPs in order to operate a new parliamentary committee that would help create a plan to introduce a price for carbon emissions.

Climate change minister Greg Combat said an announcement will be made in the “very near future” regarding the make-up of the committee.

“We’ll certainly be looking for the coalition to participate,” he told ABC Radio. “This is an important economic reform that a number of important figures external to the parliament are calling for.”

However, opposition frontbencher Christopher Pyne has said Prime Minister Julia Gillard has broken her promise regarding a carbon tax.

“Either the prime minister told a bald-faced lie or she is now simply trying to dissemble after the election and get out of what she then at the time thought was a genuine promise,” he told ABC. “You can’t have it both ways.”

Gas groups LNG and Metgasco have agreed to study the feasibility of converting gas to LNG at Gladstone in Queensland.

“Metgasco intends to evaluate the commercial, environmental and technical feasibility of a number of export LNG options and form a view on whether an LNG export project is commercially feasible,” the company said.

“Unlike other Australian coal seam gas projects, Metgasco’s resources are located close to the coast, making floating LNG a commercial possibility.”

NZ to change foreign investment laws

New Zealand finance minister Bill English has said New Zealand will change the rules for foreign investment, saying it will broaden criteria for some aspects of international deals. “The measures I’m announcing today strike an appropriate balance,” English said in a statement.

“It’s important that we welcome beneficial foreign investment and recognise the positive contribution it makes to New Zealand through increased jobs, capital and access to export markets,” he said.

“At the same time, the Government recognises there are genuine public concerns about aspects of certain types of overseas investment.”

The new laws will particularly target land purchases, with ministers to introduce new tests on overseas investment applications for sensitive land. A review has suggested methods for simplifying and speeding up the process for assessing applications.

The changes will also see ministers consider new economic interests when deciding whether a proposed investment will help promote the country’s economy. Another “mitigating” factor will also be considered, where a proposed investment could be approved for allowing greater New Zealand involvement.

The laws are being introduced following a debate regarding a plan by Hong Kong company Natural Dairy NZ Holdings to buy a network of farms.

Also overseas, new data from Japan shows annual export growth continued to decline for a sixth consecutive month in August. Ministry of Finance data revealed export growth came to 15.8%, well under the forecast for a 19% rise.