The New Zealand dollar rallied almost 1 US cent as investors digested the Group of Eight leaders pledge to support growth policies in the euro zone, ahead of European Union's Wednesday meeting.
The New Zealand dollar rose as high as 76.57 US cents overnight, from 75.89 cents yesterday at 5pm. It traded at 76.47 US cents at 8am. The trade weighted index increased to 69.12 from 68.73.
The New Zealand dollar rebounded from a 5 and-a-half month low as markets responded to news leaders from the eight largest industrial economies are pushing for Greece to stay in the euro, even as no concrete decisions have been made to support the indebted nation. Further details are expected to emerge this Wednesday when EU leaders meet in Brussels ahead of next month's summit.
"There has been nothing negative out of Europe overnight - the kiwi will probably move up towards 76.70 cents today," said Tim Kelleher, head of institutional FX sales NZ ASB Institutional. "It's come off pretty hard in the last fortnight - the market has basically got short and now we are recovering."
German chancellor Angela Merkel is coming under growing pressure to ease back on her support for austerity measures after Greece failed to elect a government on May 6. Fresh elections have been rescheduled for next month.