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NZ dollar climbs to highest in almost eight weeks

Thursday 18th March 2010

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The New Zealand dollar rose to the highest level in almost eight weeks as the Federal Reserve’s reiteration of its policy to keep interest rates low for an extended period, helped spur a rally in global equities and bolstered investors’ appetite for higher yielding, or riskier assets.

The Federal Open Market Committee reiterated it is in no hurry to raise the interest rates and it would be kept to near zero. The Fed also announced its asset purchase scheme is slowly winding down, a signal that stimulus measures are being removed over time. The Chicago Board Options Exchange Volatility Index, or VIX, known as Wall Street’s ‘fear gauge’, dropped 4.4% to 16.9, near the lowest since May 2008.

“Risk appetite has clearly bolstered the market” and that’s helped lift the kiwi dollar, said Mike Symonds, head of sales and foreign exchange at Bank of New Zealand.

The New Zealand dollar recently traded at 71.4 US cents, from 71.2 cents late yesterday. It fell to 77.29 Australian cents from 77.46 cents. The kiwi fell to 46.59 British pence from 46.69 pence.

The kiwi dollar earlier traded as high as 71.78 US cents and Symonds said the currency will probably push through to 72 cents incoming weeks. It will likely hold within its range of the past few months of 68 cents to 73 cents, he said.

It rose to 51.95 euro cents from 51.58 after Germany Michael Meister, financial affairs spokesman for Germany’s Christian Democratic Union, told Bloomberg that an aid package for Greece wasn’t yet a done deal. European nations have agreed in principle to extend emergency loans available for Greece, to help fend off a monetary meltdown.

The New Zealand dollar rose to 64.47 yen from 64.42 yesterday, when the Bank of Japan announced it would keep interest rates at a record low and double the size of its liquidity programme for banks, in an attempt to help reduce borrowing costs and raise corporate sentiment.

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