NZ dollar rises

Friday 24th December 2010

The New Zealand dollar strengthened overnight, shrugging off yesterday's data which showed gross domestic product contracted 0.2% in the September quarter.

By 8am today the kiwi was buying US74.81c, up from US74.35c at 5pm, and after touching a one-week high around US75c earlier today.

From a new decade low against the Australian dollar around A73.85c after the GDP figures yesterday morning, the kiwi moved through A74.18c at 5pm yesterday to A74.47c at 8am today.

BNZ currency strategist Mike Jones said solid real money and commercial appetite for the NZ dollar against the aussie and euro, had underpinned a strong bounce in the kiwi against the greenback after the initial GDP dip.

Overnight the NZ dollar had continued its ascent against the US currency.

Trading was fairly listless overall, but a generally solid batch of US data and further strength in global commodity prices ensured growth-sensitive currencies such as the NZ and Australian dollars outperformed, Jones said.

The NZ dollar peaked at a fortnight high 0.5724 euro and at 8am was at 0.5699, up from 0.5669 at 5pm. The kiwi was up to 62.05 yen from 61.77, while the trade weighted index rose to 67.51 at 8am from 67.19 at 5pm.

The euro rebounded from a three-week low against the US dollar, but analysts said persistent worries about Europe's debt crisis would limit gains and could lead to a renewed decline in the new year.

More ratings downgrades for European countries, including euro zone member Portugal, stoked fear that a debt crisis that has already engulfed Ireland and Greece may spread further.

But the euro, which earlier fell below its 200-day moving average for the fourth straight day, rebounded as investors took profits and after Standard & Poor's reaffirmed its AAA rating for France, the euro zone's second largest economy.

NZPA

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