The New Zealand dollar jumped against the greenback overnight as investors weigh the imminent prospects of a partial US government shutdown later today should Congress fail to reach agreement on funding.
The kiwi rose to 83.03 US cents at 8am in Wellington, from 82.84 cents at the 5pm market close in Wellington yesterday, making it the strongest performer versus the US dollar among actively traded major currencies, according to Reuters data. The trade-weighted index gained to 77.33 from 77.19 yesterday.
The US dollar broadly weakened overnight as a deadline to avert a US government shutdown approaches. Demand for the greenback has waned amid uncertainty about the likelihood of a US government budget deal being struck by midnight in Washington, or 5pm New Zealand time.
"We saw the US dollar broadly weaken overnight as this debacle with the US government on their closedown looms, what this meant is we saw the kiwi and the Aussie dollar creep higher," said Stuart Ive, senior client advisor, foreign exchange and derivatives at OM Financial. "We are going to hover here until we find out what is actually going on with the US government."
Demand for the kiwi is underpinned by a buoyant local economy, Ive said.