The New Zealand dollar recovered some ground on confidence trade with China would not be as severely affected as first thought by a food contamination scare at Fonterra Cooperative Group, the nation's largest company.
The kiwi rose to 78.05 US cents at 8am in Wellington from 77.71 cents at 5pm yesterday. The trade-weighted index advanced to 74.04 from 73.81 yesterday.
The local currency fell yesterday after revelations of contaminated products produced by Fonterra, the world's largest dairy exporter. Late yesterday, Fonterra said China had not imposed a blanket ban of its products including whole and skim milk powder but had temporarily suspended a few whey products.
"The measured response by China has encouraged people that we could see a lesser impact than we first thought," said Sam Tuck, senior manager FX at ANZ New Zealand.
"At the open yesterday everybody thought the dispute might be protracted. (But) the majority of exports to China are probably unlikely to be affected, which makes a huge difference."