NZ dollar rises to 5-month high

Photo / Dean Purcell

The New Zealand rose to a five month high against the greenback, bucking a slide on equity and commodity markets with traders betting the currency still has more ground to gain.

The New Zealand dollar reached 78.78 US cents, its highest level since Nov. 9, on bets that the currency is on track to break the 80 US cents level last seen in 2008.

That saw the kiwi buck a retreat towards safe haven currencies, such as the Swiss franc, after Japanese authorities raised the severity of its nuclear crisis to the same level as the 1986 Chernobyl disaster.

On Wall Street, the Standard and Poor's 500 Index fell 0.8 per cent to 1314.16 after Alcoa Inc's missed sales results.

The reversal of risk sentiment also saw commodities retreat, with Thompson/Reuters Jefferies Index, a broad measure of 19 commodities, falling 1.9 per cent to 359.05.

"You would normally argue that with equities and commodities down the kiwi would go with it, but we tested and created higher recent levels overnight," said Alex Sinton, a senior dealer at ANZ New Zealand.

"We saw strong support for the kiwi due to supply issues into the market, and people are just staying put based on the amount of demand we're seeing at the moment."

The kiwi rose to 77.35 US cents from 78.27 cents yesterday, and was little changed at 68.10 on the trade-weighted index of major trading partners' currencies from 68.11.

It rose against to 74.92 Australian cents from 74.68 cents yesterday, and fell to 65.54 yen from 65.99 yen. It fell to 54.10 euro cents from 54.24 cents yesterday, and rose to 48.19 pence from 48 pence previously.

Demand for the kiwi was also bolstered by comments from Reserve Bank Governor Alan Bollard yesterday.

He said higher farm export prices will underpin the strength of the country's currency could accelerate the need for a rate hike to combat inflation pressures.

Sinton said he sees the kiwi trading in a range of between 78.12 US cents and 78.92 cents today, with a bias towards the top end.