NZ dollar squeaks above US78c
The New Zealand dollar's three-week drive higher continued at pace overnight, with the kiwi topping US78c against the greenback for the first time in nine weeks.
The New Zealand dollar's three-week drive higher continued at pace overnight, with the kiwi topping US78c against the greenback for the first time in nine weeks.
BNZ currency strategist Mike Jones said growth-sensitive currencies outperformed overnight, as strong risk appetite and renewed optimism about the global economy buoyed demand for the carry trade -- when investors borrow in low-yielding safe haven currencies such as the yen and invest in higher yielding assets such as the NZ and Australian dollars.
The NZ dollar rose from US77c in mid-afternoon yesterday to US78c at 8am today. It also peaked at an 11-month high around 66.70 yen early today, having pulled away from the 65.70 yen level last night.
BNZ's Mr Jones said broad-based yen selling was behind the NZ dollar's lift against the Japanese currency. That, along with solid buying from momentum accounts, helped propel the kiwi's rise against the US currency.
Gains in global commodity prices also helped underpin the kiwi yesterday and overnight. While milk prices eased at Fonterra's auction yesterday, for now the NZ dollar seemed to be taking its cues more from surging prices for global commodities such as oil and metals, Mr Jones said.
The recent strengthening in the NZ dollar against the greenback had not been accompanied by gains in New Zealand interest rate differentials against US rates. That increased the risk of a sharp reversal in the NZ dollar's fortunes.
The euro rose to a 14-month high against the US dollar on speculation the European Central Bank will signal further interest rate rises following an expected increase tonight.
The NZ dollar rose to 0.5442 euro at 8am from 0.5412 at 5pm, while gaining to A74.69c against the Australian dollar from A74.40c. The trade weighted index rose to 68.16 at 8am from 67.64 at 5pm.
NZPA
Thu, 07 Apr 2011
Thu, 07 Apr 2011
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NZ dollar squeaks above US78c
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