Kiwi recovers from fall on Japanese nuclear risk

Wednesday 13th April 2011

The New Zealand dollar has recovered the ground it had lost after the crisis at Japan's Fukushima nuclear plant was upgraded by authorities, peaking at a new five-month high.

By 8am today the kiwi was buying US78.38c, having dropped to below US77.50c in mid-afternoon trading yesterday after radiation leaks at the Japanese nuclear plant were given a more serious rating of seven out of a scale of seven, the same as the disaster at Chernobyl.

The NZ and Australian dollars, metal prices and global equity prices were all sent lower as risk aversion increased.

The kiwi climbed through the evening and night to peak around US78.80c early today before then dropping away.

ANZ said downside tests of the NZ dollar had been averted in the offshore session as familiar demand returned.

Safe haven currencies the yen and Swiss franc had gained the most, but the kiwi was a surprise package even as the aussie slipped, ANZ said.

Perhaps the NZ dollar was being viewed as a safe haven given this country's nuclear free status and position as a major food exporter.

Also it was possible comments yesterday by Reserve Bank Governor Alan Bollard about the exchange rate might have gained some attention.

The kiwi climbed above A75c against the aussie early today for the first time in seven weeks, and was hovering around that level at 8am, up from A74.64c at 5pm yesterday.

Mere anticipation of higher inflation data in this country had seen markets leave behind the familiar A74.79c resistance level, ANZ said.

The NZ dollar rose to 65.61 yen at 8am from 65.35 at 5pm, and was slightly higher at 0.5413 euro. The trade weighted index rose to 68.10 at 8am from 67.78 at 5pm.

NZPA

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