Currency: Dollar rockets up against US

The New Zealand dollar rocketed up against the greenback after the United States Federal Reserve said it will buy USUS$300 billion (US$575.8 billion) of long-dated Treasuries over the next six months to boost the US economy.

The kiwi surged to a two-month high around US54.60c after the announcement, around 7.15am (NZT) today, as analysts feared the Fed's move would flood the market with US dollars and increase already large US deficits.

For two days before the announcement, the NZ dollar had been locked in a narrow range between US53.20c and US52.60c. At 8am it was buying US54.40c.

The Fed also said it would extend mortgage-related debt purchases to help ease credit market conditions.

"Bottom line is that the Fed is adding USUS$1 trillion to its balance sheet and that's a lot of taxpayer money," said Greg Salvaggio, vice president for trading at Tempus Consulting in Washington.

"Interest rates now are effectively negative across the board. The (US) dollar is selling off because this may contribute to long-term weakness in the currency."

At today's local open the kiwi was also buying 0.4052 euro from 0.4064 at 5pm yesterday, and lifted to 52.40 yen from 52.19.

Against the Australian dollar the kiwi was buying A80.37c at 8am from A80.05c at 5pm. The trade weighted index rose to 54.43 at 8am from 53.95 at 5pm.

- NZPA