Kiwi sell-off ends as G8 backs growth shift for Europe

BUSINESSDESK: The New Zealand dollar gained for just the second time this month as leaders of the Group of Eight nations signalled a shift towards growth policies in Europe may be a good thing.

The kiwi rose to 75.89 US cents at 5pm from 75.59 cents at 8am, and was up from 75.64 cents at the close of trading in New York last week.

The trade-weighted index gained to 68.73 from 68.47 on Friday.

New Zealand's currency is said to be poised for a so-called "corrective bounce" after plunging 8.7% since April 30 to as low as 75.17 US cents yesterday.

Global investor confidence improved after the majority of G8 leaders backed a step towards economic growth to help revive Europe's flagging regional economy.

German Chancellor Angela Merkel is coming under growing pressure to ease back on her ardent support for austerity measures after Greece's general election failed to elect a viable government amid discontent over necessary budget cuts to let the Mediterranean nation secure a bailout package.

"The weekend G8 leaders' pro-growth policies probably got the idea of things shifting a bit" in investors' minds, said Imre Speizer, market strategist at Westpac Banking.

"The kiwi got very, very oversold, and all the long positions have been cleared out," he said, referring to a trading strategy where investors make a bet one way or the other.

Underpinning investor confidence was a Der Spiegel report that the European Central Bank increased the limit of its emergency liquid assistance programme for Greek banks to 100 billion euros from 90 billion euros.

Here, Finance Minister Bill English will deliver his fourth Budget on Thursday, when he will show the path towards an operating surplus in the 2014-15 financial year with no new spending this year.

The kiwi may rise this week, according to the balance of opinion among six strategists in a BusinessDesk survey.

Government figures showed New Zealand had a net outflow of migrants last month of 2300, with record numbers of locals shifting to Australia.

The kiwi rose to 77.02 Australian cents from 76.65 cents last week, and gained to 60.07 yen from 59.63 yen.

It increased to 59.37 euro cents from 59.19 cents on Friday in New York, and advanced to 47.90 pence from 47.70 pence.