The New Zealand dollar rose to a record against the euro after German Chancellor Angela Merkel and French President Nicolas Sarkozy met to agree terms for closer fiscal union between the common currency's member states.
The New Zealand dollar rose as high as 61.72 euro cents, just above the 61.60 cent level it reached in August last year, the highest since the euro was issued in 2002. It traded recently at 61.66 cents. The kiwi traded at 78.55 US cents, up from 77.86 cents.
Merkel and Sarkozy met in Berlin to flesh out a rulebook for budgetary discipline negotiated at a December 9 summit that seeks to create a "fiscal compact" for the 17- member euro area. The leaders announcing a new budget may be completed a month earlier than expected, while also reminding Greece it needs to strike a deal with private sectors and bondholders and investors who are unwilling to buy securities at a loss.
"People will become nervous if they don't see anything" come out of the meeting, said Imre Speizer, market strategist at Westpac. "The meeting had little market impact - it is just the usual rhetoric. Over the next few days you can see the New Zealand dollar push higher."
Germany, Europe's biggest economy, sold 3.9 million euros of six-month bills at a negative yield, Bloomberg reported. France, Greece, Italy and Spain are scheduled to sell bonds this week, providing a further litmus test of demand for the region's assets.
