Dollar gains lost ground

Photo / Dean Purcell

The New Zealand dollar regained some lost ground against the greenback as traders decided the United States currency's rally last week was too fast.

By 8am today the kiwi was buying US70.74c, from US70.37c at 5pm, and after dropping below US70c - briefly - for the first time in more than a month yesterday afternoon.

US stocks recovered from an earlier decline on global economic worries sparked by disappointing Japanese growth data.

That saw the greenback give up some of last week's gains when risk aversion had pushed it up more than 3 per cent against a basket of currencies.

BNZ markets strategist Mike Jones said that, for the most part, the NZ dollar's level against the greenback spent the night tracking gyrations in global risk appetite as investors' outlook for the global economy swung between optimism and pessimism.

A plunge in global bond yields had boosted the relative yield advantage of the kiwi which, combined with a modest recovery in equity markets and risk appetite, helped the NZ dollar recoup earlier losses against the US currency, Jones said.

The kiwi fell to a 3-1/2-month low against the Australian dollar around A78.60c earlier today, edging back up to A78.79c by 8am today but still lower than the A78.96c at 5pm yesterday.

The NZ dollar was at 0.5516 euros at 8am from 0.5501 at 5pm, and was little changed on 60.36 yen. The trade weighted index was 66.02 at 8am from 65.91 at 5pm.

- NZPA