NZ dollar holds on to recent gains

The New Zealand dollar held recent gains today as stock markets firmed.

Around 5pm the New Zealand dollar was at US71.60c from US71.58c at 8am and US71.16c at 5.30pm yesterday.

Appetite for risk has been boosted by strong profit reports in the US corporate earnings season and hopes that the Chinese authorities will ease policy as the year progresses to support economic growth.

But trading was fairly quiet in this time zone as investors waited for a testimony to Congress by Federal Reserve Chairman Ben Bernanke on Wednesday US time. He is expected to strike a cautious tone, while playing down the prospect of a double dip recession.

The euro has rallied more than 5 per cent so far this month on easing concern about the euro zone debt crisis and after weak US economic news eroded the greenback's yield appeal.

In New Zealand, data showing a slowdown in migrant arrivals suggested a diminished level of support for the economy from this source.

"At the margin, if the more recent trends are sustained, this is likely to have a downward impact on the Reserve Bank's growth projections come the September monetary policy statement," Deutsche Bank said in a report.

BNZ markets strategist Mike Jones said market appetite for the NZ and Australian dollars against the yen helped underpin support for both currencies.

The NZ dollar rose to 0.5555 euro at 5pm from 0.5488 yesterday, and was 62.39 yen from 61.94 yesterday. It was little changed against the Australian dollar, at A81.16c from A81.07c yesterday.

The trade weighted index rose to 67.31 at 5pm from 66.82 yesterday.

- NZPA