Kiwi at three-week high after economy grows 1.5%, Cyprus woes hover
The New Zealand dollar climbed to a three-week high after government figures showed the economy grew 1.5 percent in the final three months of 2012, almost twice the Reserve Bank's forecast.
The kiwi rose to 82.67 US cents at 5pm in from 82.27 cents at 8am and the same price yesterday. The trade-weighted index gained to 76.12 from 75.78 yesterday.
New Zealand's economy grew at a faster pace than expected on growing international demand for local logs and as the $30 billion Canterbury rebuild continues to gather momentum.
The better-than-expected growth means it is starting from a stronger position going into the dry climate that has started 2013 and pushed the North Island into its worst drought in almost 70 years.
"The economy is at a reasonable starting point, but the drought is going to take its toll – it's going to be pretty huge," says Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney. "The kiwi will probably stay firm for the time being, but the focus will quickly turn to the drought if headlines keep getting worse."
The kiwi got a boost from Chinese manufacturing figures beat expectations and showed the industrial production sector in China expanded for a fifth month.
It may trade between 82.50 US cents and 83 cents for the remainder of the week, he says.
The local currency traded at 63.86 euro cents from 63.90 cents yesterday, with investors waiting for the next instalment in Cyprus' fiscal woes amid speculation the Mediterranean island will get a bailout from Russian investors as an alternative to a stalled European Union proposal.
The kiwi rose to 79.69 Australian cents from 79.28 cents yesterday and increased to 54.67 British pence from 54.52 pence. It was at 79.33 yen from 78.19 yen.