NZ dollar eases back after push above 75USc

The New Zealand dollar pushed up to 75USc for the first time since March early today, helped by a solid rebound in the euro and positive sentiment to so-called risky currencies.

It peaked around 75.20USc against the greenback, but drifted lower for most of the session to be 74.85USc at 5pm from 75.03USc by 8am. That was up from 74.55USc at 5pm yesterday and it has rebounded from the six-and-a-half-month low around 71.15USc on March 17.

The euro rose against the US dollar on optimism European policymakers will be able to control a political and debt crisis in Portugal.

ANZ Bank said the so-called risk currencies, including the Australian and NZ dollars, had been on the march, led by a solid rebound in the euro ahead of a European Union summit.

BNZ said today that the differential between New Zealand interest rates and those in other markets were "rock-bottom" after the central bank cut the official cash rate recently, reducing New Zealand's "carry trade attractiveness."

New issues of bonds denominated in NZ dollars in Europe were low and there was a possibility that maturing NZ dollar uridashi bonds would be repatriated back to yen.

"Investment interest in NZ dollar eurobonds is likely to remain subdued this year, and net issuance negative," BNZ said.

The Australian dollar was within striking distance of a 29-year peak against the greenback today, supported by flows supporting corporate merger deals.

There was no data in either Australia or New Zealand today but Reserve Bank governor Alan Bollard presented his thoughts on prudential regulation to a conference at Sydney. He said prudential policy was being developed but there were no silver bullets to stop boom and bust cycles.

The NZ dollar had received decent support from a government bond tender yesterday, which attracted significant bids.

The NZ dollar was at ¥60.61 at 5pm from ¥60.33 at the same time yesterday and was at 73.40Ac against the aussie from 73.60Ac yesterday. It was at €0.5282 from €0.5289 yesterday.

The trade weighted index eased to 65.53 at 5pm from 65.60 at 8am but was still above the 65.45 at 5pm yesterday.