Dollar rises ahead of monetary policy statement

The New Zealand dollar rose today as traders squared up positions ahead of tomorrow's monetary policy statement by the Reserve Bank of New Zealand.

The NZ dollar was at US70.63c at 5pm and rose as high as US70.69c during the domestic session. It was US69.91c at 5pm yesterday.

"People who have gone long of aussie and short of kiwi are squaring up going into tomorrow's statement," one dealer said.

The central bank is expected to keep the official cash rate unchanged at 2.5 per cent and the focus will be on any indication the bank gives of when it will start raising rates.

The Reserve Bank of Australia has already hiked its rate to 4 per cent but the New Zealand economy is not performing as well as the Australian economy.

The NZ dollar rose to A77.07c at 5pm from A76.84c at the same time yesterday.

News today of a 5.7 per cent surge in New Zealand's terms of trade in the December quarter, as import prices fell much further than export prices, did not affect the currency market, though the data was seen as evidence that the recovery was rebalancing towards production.

The increase in the terms of trade was the largest since 1976 and followed six consecutive quarterly falls, Statistics New Zealand said.

Dealers said sterling was weaker today. Losses by the pound and euro overnight had dragged the NZ dollar down against the US dollar.

The NZ dollar was again at post-float highs against sterling and was at 47.17p at 5pm, up from 46.54p at 5pm yesterday.

The NZ dollar gained overnight to 63.29 yen at 8am from 62.92 yen at the local close yesterday, despite the Japanese currency gaining broadly as Japanese corporates took money back home in the run-up to the March 31 fiscal year-end. It gained further to be 63.55 yen at 5pm.

The trade weighted index rose to 65.26 at 5pm from 64.65 yesterday.

- NZPA