NZ dollar reaches 88c to the USD

NZPA

Monday 1st August 2011

The remorseless rise of the New Zealand dollar against the greenback continued, with the kiwi yet again hitting a post-float high as it reaches US88c.

The US dollar fell to a record low against the Swiss franc and a four-month trough against the yen, both traditional safe-haven currencies, as weak data on US economic growth ignited fears the economy could slip into another recession.

Politicians in the US continued to wrangle over a plan to cut American spending, raise the nation's borrowing limit and avert an unprecedented debt default, as party leaders continued to express optimism that an agreement would be reached.

At 8am today the kiwi was buying US87.95c, after surging from US86.67c at 5pm on Friday. The NZ dollar also rose to 0.6112 euro from 0.6046, and rose against the Australian dollar to A79.84c from A78.97c.

BNZ currency strategist Mike Burrowes said the NZ dollar had been one of the best performers against the US dollar on Friday, trailing just behind the safe haven Swiss franc and the yen.

The NZ dollar had been propelled higher by strong flows from the leveraged and speculative community, mainly scrambling to cover short positions.

Other commodity-sensitive currencies, the Australian and Canadian dollars struggled as they were more affected by poor risk sentiment.

ANZ said many people would have difficulty with the opening level of the NZ dollar today and find every reason it should not be at that elevated level.

The NZ dollar was also up to 67.90 yen at 8am from 67.16 at 5pm, while the trade weighted index rose to 74.79 from 73.91.

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