Kiwi peaks at Christchurch quake level

Thursday 31st March 2011

The New Zealand dollar early today rose to levels not seen since the devastating February 22 earthquake hit Christchurch, as investors continued to take a positive view of the outlook for the global economy.

The NZ dollar peaked at US76.37c around 6am, according to Reuters data. It eased to US76.23c at 8am, having climbed from around US75c early yesterday.

BNZ currency strategist Mike Jones said growth sensitive currencies, such as the NZ dollar, outperformed overnight as global investors continued to rediscover an appetite for risk.

Labour market data in the United States impressed and there had been no further deterioration in the Japanese nuclear crisis or evidence of wider contagion from Portugal's recent debt woes, Jones said.

While the strength of the NZ dollar against the greenback looked inconsistent with fundamentals, positive momentum could still prompt a test of the US77.20c level as the global backdrop remained the key driver of the kiwi for now.

The NZ dollar also rose to its highest level against the Japanese currency since February 22, peaking at 63.36 yen, after climbing from 62.91 yen at 5pm. It eased to 63.18 yen at 8am.

From 0.5378 euro at 5pm, the kiwi reached a four-week high 0.5425 euro before easing to 0.5399 at 8am.

Against the Australian dollar, the kiwi peaked at a two-week high A73.95c, having risen from A73.49c at 5pm and then easing to A73.84c at 8am. The trade weighted index rose from 66.56 at 5pm to 66.83 at 8am.

The euro hit a 10-week high against the yen and rose against the US dollar as markets braced for higher euro zone interest rates.

A European Central Bank policymaker said the ECB intended to raise rates gradually, which traders said suggested next week's expected hike may be the first of several.

The prospect of higher euro zone borrowing costs bolstered hopes the world economy was improving and encouraged investors to take on more risk.

The Australian dollar rose to $US1.0338, its highest level since it was first floated in the early 1980s. It also hit a 10-month high against the yen.

NZPA

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