Kiwi echoes global rallies

File photo / Dean Purcell

The New Zealand dollar forged ahead yesterday, recovering the more than US2c lost in the last week in the wake of Japan's catastrophic earthquake and tsunami, followed by a nuclear crisis in the world's third-largest economy.

Having dropped to a seven-month low around US71.15c on Thursday morning, the kiwi hit a high at 5pm of US73.75c yesterday. The currency gained about a third of a US cent during the session.

"Investors have shrugged off concerns in Japan and the Middle East for now to give risk assets a boost with equities, commodities and high yielding growth currencies all benefiting," said Daniel Bell of HiFX.

Global equity markets rallied, including Tokyo's Nikkei share average which was up more than 3 per cent yesterday afternoon. The Nikkei plunged 14 per cent last week as concerns grew about a crippled nuclear power plant in northern Japan.

"We are expecting another volatile week for the NZD as the market comes to terms with developments in Japan as well as the local release of our fourth quarter GDP [gross domestic product] this Thursday, where some economists are picking a negative quarter of growth," Bell said.

Against the Australian dollar, the kiwi rose a touch to A73.31c from Monday's A73.27c. The kiwi was also firmer against other key currencies, rising to €0.5185 from €0.5173, to 45.24p from 44.21p, and to 59.73 from 59.35. The trade weighted index was consequently higher, at 64.61 from 64.37.

The euro pushed on from its overnight five-month high around US1.4200, trading at US1.4220 late this afternoon. The single currency was boosted by growing expectations of a rate hike by the European Central Bank at their April 7 meeting, Bell said. The US Federal Reserve, in contrast, was focusing on stimulus, meaning rate rises were further off for the greenback.

- NZPA