The New Zealand dollar rose as fears over emerging markets fell, fuelling demand for risk-sensitive assets such as the kiwi, and ahead of the Reserve Bank of New Zealand and US Federal Reserve policy reviews tomorrow.
The kiwi increased to 82.81 US cents at 5pm in Wellington from 82.59 cents at 8am and 82.75 cents yesterday. The trade-weighted index rose to 78.37 from 78.20 yesterday.
Global stock markets rallied and investors returned to riskier assets after fears over some developing economies subsided, with Turkey's central bank hiking interest rates to quell a sell-off of Turkish lira.
That comes ahead of the Federal Open Market Committee meeting, which is expected to see the Fed trim another US$10 billion from its US$75 billion monthly asset purchase programme, and New Zealand's central bank meeting, which has divided markets on whether governor Graeme Wheeler will raise interest rates at this review or the next.
"Only if we get a hike will it be good for the kiwi," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland. "The signal to March (for a rate hike) might pull the kiwi back a bit, and no signal will see it fall sharply."
