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Kiwi eases back after push above US75c

Friday 25th March 2011

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The New Zealand dollar pushed up to US75c for the first time since March early today, helped by a solid rebound in the euro and ongoing positive sentiment to so-called risky currencies.

It peaked around US75.20c against the greenback, but drifted lower for most of the session to be US74.85c at 5pm from US75.03c by 8am. That was up from US74.55c at 5pm yesterday and it has rebounded from the 6-1/2-month low around US71.15c on March 17.

The euro rose against the US dollar on optimism European policymakers will be able to control a political and debt crisis in Portugal.

ANZ bank said the so-called risk currencies, including the Australian and NZ dollars, had been on the march, led by a solid rebound in the euro ahead of a European Union summit.

BNZ said today that the differential between New Zealand interest rates and those in other markets were "rock-bottom" after the central bank cut the official cash rate recently, reducing New Zealand's "carry trade attractiveness".

New issues of bonds denominated in NZ dollars in Europe were low and there was a possibility that maturing NZ dollar uridashi bonds would be repatriated back to yen.

"Investment interest in NZ dollar eurobonds is likely to remain subdued this year, and net issuance negative," BNZ said.

The Australian dollar was within striking distance of a 29-year peak against the greenback today, supported by flows supporting corporate merger deals.

There was no data in either Australia or New Zealand today but Reserve Bank of New Zealand governor Alan Bollard presented his thoughts on prudential regulation to a conference at Sydney. He said prudential policy was being developed but there were no silver bullets to stop boom and bust cycles.

The NZ dollar had received decent support from a government bond tender yesterday, which attracted significant bids.

The NZ dollar was at 60.61 yen at 5pm from 60.33 at the same time yesterday and was at A73.40c against the aussie from A73.60c yesterday. It was at 0.5282 euro from 0.5289 euro yesterday.

The trade weighted index eased to 65.53 at 5pm from 65.60 at 8am but was still above the 65.45 at 5pm yesterday.

 

NZPA



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