NZ dollar rises, Yen soars on quake news

The New Zealand dollar started the week higher as investors scrambled to understand the financial ramifications of the huge earthquake in Japan.

The NZ dollar was at US74.28c at 8am, up from US73.56c at 5pm on Friday.

The yen soared on Friday after the worst earthquake on record hit Japan and the US dollar fell 1.2 percent to 81.87 yen, its biggest one-day decline since December 3, Reuters reported.

While the euro rose after European leaders reached a deal to limit budget deficits and increase a bailout fund.

Westpac said the euro-group agreement, a solid US retail sales report, and lower oil prices all helped the New Zealand dollar.

"Strong underlying demand during the European session ensured that the NZ dollar lifted through resistance levels to close the week strongly. Short position holders accentuated the move higher," ANZ said.

ANZ expected the NZ dollar to be supported today and it should trade in a range between US73.95c and US74.62c.

During the weekend the price of oil tumbled 1.5 percent on the closure of Japanese refineries, and Japanese stocks were punished 1.7 percent, with more to come. European stocks were also lower, led down by reinsurance companies.

The earthquake and tsunami devastated Japan on Friday and shut down ports, power plants and refineries, leading to a sell-off in most commodities on fears of a destruction in demand in the world's No 3 economy.

The Bank of Japan plans to pump "massive" funds into markets on Monday, Dow Jones Newswires said.

The Bank of Japan said it would do its "utmost" to provide market liquidity and ensure the stability of financial markets after the quake struck.

"Watch for Bank of Japan activity today. While the technical setup is bullish for our currencies for the day ahead, the scale of Japan's event suggests a risk averse tone will pervade," Westpac said.

The NZ dollar was at A73.13c from A73.35c on Friday.

Against the euro, it was 0.5316 from 0.5323 on Friday and against the yen it was 60.75 from 60.90 on Friday.

The trade weighted index was at 65.48, up from 65.26 on Friday.