Dollar claws back ground

NZPA

14 Jun, 2011 05:30 PM2 mins to read

Photo / File

The New Zealand dollar climbed yesterday to claw back a lot of the ground it lost on Monday after the 6.3 magnitude aftershock in Christchurch, and was at US81.85 at 5pm yesterday, up from its US81.34c exchange rate against the greenback at the same time on Monday.

The kiwi reached an intraday high of US81.94 after data showed price pressures in China had not risen as much as feared, forcing the market to unwind short positions, Reuters reported.

Analysts now expect the next lift in NZ interest rates to be in January rather than December. It shed nearly US1c to a low of US81.17 on Monday as Christchurch was rocked by tremors that killed one man and injured another 40 people. The sharp fall came in the wake of the kiwi hitting a 26-year high of US83.01c last Friday.

The additional damage in the city centre and suburbs led to some analysts voicing concerns about more parts of the proposed $15 billion reconstruction effort, and the national economic recovery. Prime Minister John Key said the Government had identified suburbs and parts of suburbs which would have to be abandoned, but declined to identify them at this stage.

The Australian dollar also climbed - to US$1.0639 at 5pm from US$1.0543 at 8am after data showed China's inflation at 5.5 per cent in the year to May, rather than the level of 5.8 to 6.0 per cent expected by some traders who has sold the Aussie in the run-up to the inflation figures being released.

China is a key customer for Australian and New Zealand commodities and the inflation figures and other data for industrial output signalled a soft landing for the Asian economy.

ANZ bank said euro strength had helped to drag the NZ dollar higher.

The kiwi held its exchange rate against the euro, to be €0.5670 at 5pm - almost exactly where it was at the same time on Monday - and rose to 65.69 from 65.51.

Against the Australian dollar the kiwi was down to A76.95c at 5pm from A77.17c a day earlier, with the trade weighted index lifting to 70.43 at 5pm from 70.34.

- NZPA