The New Zealand dollar rose against the greenback, with the US dollar sliding in the wake of Standard & Poor's decision to strip the world's largest economy of its triple-A credit rating.
The greenback came under pressure in trading on Friday in New York, amid speculation the credit ratings agency was preparing to downgrade the US, stripping out any positive gains from the slightly better-than-expected US nonfarm payroll data for July.
That the downgrade was then confirmed after the close of trading, with the US sovereign debt rating cut from AAA to AA+ and placed on negative outlook, set the dollar up for further declines.
"It really boils down to whether US officials take this on board and make the required fiscal changes and pay down debt, or whether they carry on the path that they are on," said Alex Sinton, a senior dealer at ANZ New Zealand. "What will mean in the short run is a weaker US dollar and ipso facto a stronger New Zealand dollar and Australian dollar."
The kiwi dollar was also bolstered by a stronger euro, which rose after the European Central Bank said it was considering buying Italian government bonds to help keep debt yields below 6 per cent, which is considered a sustainable level.
