Thursday 24th March 2011
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The New Zealand dollar rose in reaction to news that the economy avoided recession in the December quarter and the currency kept rallying as the day progressed.
The NZ dollar was at US74.55c at 5pm from US74.24c at 8am and US74.15c at 5pm yesterday. It rose from around US74c to US74.25c immediately on news that the economy expanded 0.2% in the December quarter. It had been feared that a negative number would produce headlines of a recession as the economy contracted slightly in the September quarter.
The NZ dollar was the strongest-performing currency on the day, Mike Jones at BNZ said.
"The confirmation of a small positive for fourth quarter gross domestic product (GDP) prompted a relief rally in the currency. It performed particularly strongly against the Australian dollar," Jones said.
The NZ dollar rose to A73.60c by 5pm from A73.13c at 8am and A73.44c at 5pm yesterday.
Investors have also been generally more comfortable with holding so-called risky currencies such as the NZ dollar as concerns about the Japanese nuclear crises abate.
"The global backdrop has become more positive for the NZ dollar and the positive piece of domestic news added to it," Jones said.
With GDP data out of the way the NZ dollar would reflect gyrations in global risk appetite. Currently there were concerns about Portugal's ability for reform its economy.
The NZ dollar has been firm against the European currency, lifting to 0.5295 euro at 5pm from 0.5256 euro at 8am from 0.5230 at 5pm yesterday.
The euro eased from a 4-1/2-month high against the greenback on concerns a political crisis in debt-ridden Portugal could force its government to seek aid, though losses in the single currency should be limited amid expectations of rising euro zone interest rates.
The NZ dollar rose 60.33 yen from 59.96 yen yesterday and the trade weighted index lifted to 65.45 from 64.94 yesterday.
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