NZ dollar rises to 10-week high on buoyant market

Rallying equity markets added extra buoyancy to the New Zealand dollar yesterday, sending the currency to yet another 10-week high. By 5pm, it was at US57.06c having peaked during the session at US57.48c.

Royal Bank of Canada currency strategist Sue Trinh said risk appetite had been boosted by US Treasury Secretary Tim Geithner's bank rescue plan.

"In particular, commodities and commodity currencies have outperformed based on the view that the very sharp economic slowdown globally won't be as bad as forecast."

Adding to pressure on the US dollar are growing calls from Russia and more recently China for the introduction of a new currency to replace the greenback as the world's reserve currency.

Meanwhile, the kiwi has gained more strongly against the US dollar than most other currencies. Trinh said that was largely because of a buildup of "short" positions or bets that it would continue to fall below the US50c mark having to be unwound as it has risen against the US unit.

Trinh remains convinced, however, that New Zealand's poor economic fundamentals will eventually take the kiwi well below US50c, perhaps even below US40c by the end of the year.