Dollar rises in response to Budget

The New Zealand dollar lifted in response to the Government's budget, particularly against the Australian dollar.

The NZ dollar was already improving against a number of currencies before the 2pm announcement, but got a boost immediately afterwards.

It rose as high as A81.33c, its highest since last November, from A80.63c just before the budget and was A81.21c at 5pm from A80.15c at the same time yesterday.

It made less progress against the US dollar, which is still seen as a safe haven at a time of turmoil in global markets. It worth an even US68c at 2pm and was US68.28c at 5pm from US68.55c at the same time yesterday.

It also rose to 47.47p against the British pound, from 47.24p at 2pm.

"The kiwi dollar really greeted the budget with open arms," said Mike Jones, currency strategist at BNZ.

"This budget has come at a time of heightened concerns about sovereign debt and New Zealand's deficit is returning to surplus three years earlier than previously," he said.

The budget had contained more for the currency market that some investors were expecting.

The NZ dollar eased to 62.60 yen from 62.97 yen yesterday.

The New Zealand and Australian currencies are still expected to be vulnerable to turmoil in international markets.

Both Fitch and Standard & Poor's kept their ratings of New Zealand unchanged after the budget was released.

The trade weighted index was 66.41 at 5pm from 66.71.

- NZPA