The New Zealand dollar touched a 13-month high against the euro overnight as traders favour investing in a country with a more buoyant economy than Europe.
The kiwi reached 64.93 euro cents, its highest since June 2013, and was trading at 64.83 cents at 8am in Wellington from 64.64 cents at 5pm yesterday. The local currency was little changed at 88.21 US cents from 88.20 cents yesterday, just shy of its post-float high of 88.40 cents.The trade-weighted index touched a fresh record of 81.97 from 81.91 yesterday.
The euro weakened on concerns about the vulnerability of the region's economy after fears about missed debt payments at one of Portugal's biggest banks spread to other economies in the region, forcing Greece to scale back its plans for its second debt sale following its 2012 default. Also weighing on the euro, a report showed Italian industrial production unexpectedly dropped in May, the biggest slump in the euro area's third-largest economy since November 2012. By contrast, New Zealand's currency is strengthening as investors are attracted to the higher yield offered by rising interest rates in a buoyant economy.
"It is mainly through the strength of the kiwi and slight weakness in the euro overnight - the kiwi is on a high and not showing any sign of weakness yet," said James Davies, senior dealer, foreign exchange, at OMF. "The trend is high but the kiwi is in rarefied air up here and certainly represents value for importers, so you could see some real money flows out of the kiwi and into foreign currencies at levels like this."
In New Zealand today, the latest monthly food price index is released at 10:45am.
The New Zealand dollar touched a fresh three-month high against the Australian dollar overnight as the Aussie weakened after a report yesterday showed higher-than-expected Australian unemployment. The kiwi touched 94.12 Australian cents, its highest level since March 23, and was trading at 93.84 cents at 8am in Wellington, from 93.82 cents at 5pm yesterday.
The local currency edged up to 51.47 British pence from 51.42 pence yesterday and slipped to 89.38 yen from 89.55 yen.
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