KEY POINTS:
The New Zealand dollar continued to strengthen against major currencies today as investors began seeking risk again, although it weakened further against its Australian counterpart.
By 5pm, the kiwi was at US62.28c from US59.80c late yesterday afternoon. The currency traded in a wide range of about US1c during today's session, hitting a high of US62.45c.
It has recovered about US5c in the last week.
Against a stronger Aussie, the kiwi fell to A87.92c from A90.05c late yesterday. However, it gained ground against the euro, yen and sterling.
"Fears about the stability of the global financial system have led to one of the most volatile periods for financial markets in living memory, and currencies certainly have not been spared," Westpac market economist Michael Gordon said.
Moves by governments, including New Zealand's, to shore up the banking system injected confidence into world sharemarkets, but the key is whether it will mean an improvement in inter-bank lending, Mr Gordon said.
"If this does happen, the implications for riskier assets - including the New Zealand dollar - will be extremely positive in the short term."
However, the longer term outlook for the kiwi depended on how the world economy weathers the financial crisis.
Britain, Germany and France announced plans on Monday to recapitalise their banking systems, helping rekindle risk appetite and triggering selling of the low-yielding yen, which rallied last week as investors dumped risky carry trades.
That pushed the yen - favoured in times of risk aversion - down 1 per cent against the euro on rising hopes for an easing of the credit crisis.
Currency rates:
NZ dlr/US dlr US62.28c US59.80c
NZ dlr/Aust dlr A87.92c A90.05c
NZ dlr/euro 0.4558 0.4418
NZ dlr/yen 63.71 59.85
NZ dlr/stg 35.49p 35.10p
NZ TWI 61.10 59.59
Australian dollar US70.81c US66.45c
Euro/US dollar 1.3681 1.3536
US dollar/yen 102.33 100.08
- NZPA
