Kiwi within moderate overnight ranges

Tuesday 15th March 2011

The New Zealand dollar moved within moderate ranges overnight, after yesterday losing ground amid a bout of risk aversion in reaction to the Japanese disaster and as tensions continued in the Middle East.

Around 8am the kiwi was buying US74.02c, little changed from its level at 5pm yesterday, having been above US74.30c early yesterday.

The NZ dollar was also little changed from 5pm yesterday against the aussie, at A73.37c around 8am, while slipping to 0.5289 euro at 8am from 0.5310 at 5pm, and to 60.42 yen from 60.67. The trade weighted index fell to 65.20 from 65.30.

The US dollar rebounded from a four-month low against the yen late yesterday morning (NZT) as the Bank of Japan supplied banks with record amounts of funds to stabilise an economy shaken by a devastating earthquake and tsunami.

Investors expecting big repatriation flows from insurers and others after the quake were forced to unwind bets in favour of the yen.

But after the rebound the US dollar did slip against the Japanese currency throughout most of yesterday afternoon and overnight.

The euro, meanwhile, held above US$1.39, rising after euro zone policymakers agreed to bolster a bailout fund for troubled countries and make its loans cheaper. Expectations that the ECB will raise interest rates next month have boosted the euro in recent sessions.

The euro extended gains against the greenback early today, hitting US$1.40, after Eurogroup chairman Jean-Claude Juncker said there has been a significant increase in inflation.

NZPA

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