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NZ dollar stabilises

After tumbling to its lowest level in almost a week yesterday, helped along by comments from Reserve Bank Governor Alan Bollard, the New Zealand dollar stabilised overnight and pushed back higher.By 8am the kiwi was buying US78.16c, having dipped under US

NZPA
Thu, 11 Nov 2010

After tumbling to its lowest level in almost a week yesterday, helped along by comments from Reserve Bank Governor Alan Bollard, the New Zealand dollar stabilised overnight and pushed back higher.

By 8am the kiwi was buying US78.16c, having dipped under US77.40c yesterday afternoon, after falling from above US79.10c early yesterday.

BNZ markets strategist Mike Jones said the recovery by the NZ dollar overnight came amid solid buying of the kiwi against the euro, and strong gains in the British pound and the Canadian dollar.

A spurt higher by sterling against the US dollar after an upbeat inflation report from the Bank of England had buoyed demand for growth sensitive currencies such as the NZ and Australian dollars.

On the face of it, yesterday's attempt by Dr Bollard to talk down the currency would appear to have borne fruit, Mr Jones said.

As markets quickly moved to price out any chance of a January interest rate rise, the NZ dollar had been pitched about 1c lower against the greenback to around US77.60c.

But Dr Bollard had not done all the work, with yesterday's losses by the NZ dollar more about a mild paring of global risk appetite after China raised bank reserve requirements.

The kiwi made up losses against the Australian dollar overnight, rising from A77.50c at 5pm to A77.86c at 8am.

The NZ dollar also rose to 0.5673 euro at 8am from 0.5649 at 5pm, and lifted to 64.33 yen from 63.44, while the trade weighted index was up to 69.30 from 68.94.

The US dollar hit a one-month peak against the euro and yen as higher US bond yields prompted traders to cut bets against the greenback.

Fear about Ireland's high debt burden left investors seeking shelter in German bunds, which also kept the euro weak against the US currency for a fourth straight day.

Strong US economic data, including a decline in initial jobless claims, even had some analysts suggesting the US economy was gaining traction after months of frustratingly slow growth.

NZPA
Thu, 11 Nov 2010
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NZ dollar stabilises
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