NZ dollar falls back

The New Zealand dollar went into decline as the euro recorded its largest weekly gain against the greenback in more than 1-1/2 years.The New Zealand dollar went into decline as the euro recorded its largest weekly gain against the greenback in more than 1-1/2 years.

The kiwi fell away to US76.69c at 8am today from US77.02c at 5pm on Friday, and was down to 0.5729 euro from 0.5774, having hit its lowest level in more than a week around 0.5710 on Friday night.

The NZ dollar reached a six-week high against the Australian currency near A77.80c on Saturday morning, but by 8am was down to A77.42c from A77.27c at 5pm on Friday.

The euro's rise against the US dollar last week came after successful securities auctions by indebted euro zone members calmed fears of a credit crisis in the region.

Adding support was a $US199 billion jump in China's foreign exchange reserves in the final three months of last year, the most ever for a quarter. That means China needs to put upwards of $US15b a month into European assets just to maintain its current portfolio allocation.

In contrast, the US dollar, is again mired by talk of the United States losing its triple-A credit rating because of rising national debt.

"The (US) dollar is on a continued weakening bias, correcting from an overbought top," said Douglas Borthwick, a managing director for trading at Faros Trading LLC, a forex execution firm in Stamford, Connecticut.

ANZ said it expected consolidation of the NZ dollar to continue during trade today as markets looked offshore for further moves.

Weather "carnage" in several parts of the world meant higher commodity prices, specially for food and coal, and that was good news for this country, ANZ said.

Of the 80 largest economies in the world, New Zealand had by far the largest food exports as a share of its economy, with around 7.5 percent.

"And as a relatively rich country, food makes up less than 20 percent of household budgets on average, meaning the income effect dominates," ANZ said.

"Assuming our own paddocks don't get one crazy weather extreme or the other this season -- admittedly a big assumption -- New Zealand stands to do quite nicely out of others' misfortunes."

The NZ dollar's trade weighted index dropped to 68.89 at 8am today from 69.19 at 5pm on Friday, while being little changed at 63.54 yen.