The New Zealand dollar rose after the Group of Seven leaders agreed to discuss Europe's debt crisis, easing concern that more banks will need rescuing in the face of the region's debt crisis.
The New Zealand dollar rose to 75.70 US cents at 8am from 75.13 cents in late Asian trading yesterday, when the local market was closed for the Queen's Birthday holiday. The trade weighted index increased to 69.18.
G7 leaders are scheduled to hold a conference call on Tuesday to discuss Europe's debt crisis, with Spain likely to be top of the agenda. Euro leaders have also agreed to discuss closer banking cooperation after the European Commission called for a "banking union" to integrate tighter supervision of lenders and create a pool of EU funds to clean up banks with cross-border exposure.
"There is basically a growing call in the wider European Union to use the European Stability Fund for banks," said Stuart Ive, currency strategist at HiFX. "There is a general feeling that markets have been pretty heavily sold and the situation in Europe isn't changing until we get some plan of how they well deal with Spain."
"The kiwi reached 74.50 US cents on Friday and it has bounced back twice from that level now - we are pretty well supported," he said.