Kiwi tops 79 US cents as Greek election soothes nerves

BUSINESSDESK: The New Zealand dollar climbed above 79 US cents for the first time in more than a month after Greece elected political parties likely to sign up to Europe's austerity measures.

The kiwi rose to 79.29 US cents at 5pm from 78.88 cents at 8am and 78.75 cents on Friday in New York. The trade weighted index advanced to 71.47 from 70.91.

Preliminary election results gave pro-austerity parties New Democracy and Pasok 162 seats in the 300-seat Parliament, an indication the Mediterranean nation is willing to stay with the eurozone.

The vote deflated fears of a regional break-up and stoked investor appetite for higher-yielding or riskier assets. Stocks in Asia gained, with Japan's Nikkei 225 index up 1.9% in afternoon trading, Hong Kong's Hang Seng index up 1.6% and Australia's S&P/ASX 200 index climbing 1.9%.

"It's a bit of a relief rally rather than a game-changer - the problems in Spain and other governments with economies not growing to target is going to stick around," said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney.

"The kiwi could climb above 80 US cents if volatility stays low and markets stay positive."

Four of five strategists surveyed by BusinessDesk expect the kiwi to gain this week on the strength of the Greek election.

Markets will monitor the response to the Greek poll during the Northern Hemisphere trading session to see how the new government will cope with the eurozone's cost-cutting demands.

"It's pretty likely renegotiating austerity is going to be necessary all around the place," Mr Tennent-Brown said.

New Zealand's service sector continued to expand last month on rapid growth in new orders, according to the BNZ-BusinessNZ performance of services, though consumer confidence dimmed in the Westpac-McDermott Miller survey.

The New Zealand dollar was little changed at 62.29 euro cents from 62.30 cents on Friday in New York trading and gained to 50.45 pence from 50.08 pence.

It rose to 78.32 Australian cents from 78.09 cents last week and gained to 62.72 yen from 61.97 yen.