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Kiwi holds at record levels against greenback

Friday 27th May 2011

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After yesterday's surge the NZ dollar held at high levels against the greenback overnight, reaching a three-year high around US81.20c.

At 8am the kiwi was buying US81.12c, up from US80.69c at 5pm. It also rose to a four-month high against the European currency to be near peak levels at 0.5739 euro at 8am, up from 0.5698.

BNZ currency strategist Mike Jones said reports that China's sovereign wealth fund, the CIC, may have earmarked 1.5 percent of its foreign currency reserves - roughly $6 billion - to invest in New Zealand assets lit a rocked under the NZ dollar yesterday.

While those reports were as yet unconfirmed, they were consistent with exceptional demand recorded at recent government bond tenders, Jones said.

The rise by the NZ dollar against the greenback was also helped by an improvement in offshore risk appetite.

ANZ said the US dollar had also weakened across the board as the Asian session kicked off yesterday.

The NZ dollar had also managed to again outperform the jittery euro, as the single currency struggled to maintain gains created by chatter that China was interested in Portuguese debt. The kiwi was boosted by yield and the potential Chinese demand for New Zealand assets.

The NZ dollar peaked at a 15-week high against its Australian counterpart around A76.50c, easing to A76.28c at 8am, while being little changed at 66 yen. The trade weighted index was up to 70.38 at 8am from 70.12 at 5pm.

 

NZPA



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