NZ dollar charges higher as sun rises

NZPA

Wednesday 10th August 2011

The New Zealand dollar charged higher in concert with a surge in share prices towards the end of trading in the United States.

The kiwi had been knocked back to around US80.75c after 6am, when a statement by the US Federal Reserve failed to offer more than a two-year promise of low interest rates, coupled with a warning the US economy had weakened.

At the same time, stocks in the US gave up gains after having pushed higher for most of the session on hopes the central bank would come to the markets' rescue.

But the decline in both US stocks and the NZ dollar was short-lived.

Following the worst three-day selloff since the financial crisis, US stocks bounded higher as investors took in stride the Fed's pledge on interest rates.

The Dow Jones industrial average ended up nearly 4 percent, the Standard & Poor's 500 Index was up 4.7 percent, and the Nasdaq Composite Index was up 5.3 percent.

From 6.45am to 8am the NZ dollar soared US3c to be at US83.82c. That put it US2c ahead of its level of US81.86c at 5pm yesterday.

Against the European currency, the NZ dollar moved from 0.5750 euro at 5pm to an overnight low around 0.5680 about 6.45am before surging to 0.5846 at 8am. The kiwi also moved from 63.22 yen to a low around 62.20 then rose to 64.54.

The kiwi was slightly lower against the Australian dollar, buying A80.79c at 8am from A80.92c at 5pm, while the trade weighted index rose to 72.27 from 71.10.

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