The New Zealand dollar rose sharply today as markets reacted to the United States government bailout of mortgage finance companies Fannie Mae and Freddie Mac.
The New Zealand dollar was at US68.20c by 5pm from US66.60c at 5pm on Friday. It dropped below US66c for the first time
in 22 months earlier on Friday.
"There's been a revaluation of risk," said Lloyd Cartwright, head of financial markets at Westpac Institutional Bank.
He said the bailout had given support to so-called risk currencies like the NZ dollar and Australian dollar.
"Pretty much every currency has benefited against the US dollar today," he said.
Though he said it would be interesting to see how European markets reacted overnight.
Bank of New Zealand currency strategist Danica Hampton said the bailout had triggered a buying back of short yen cross positions, and strong demand for the NZ dollar against the yen had lifted the kiwi against the greenback.
This week is a big one for the New Zealand dollar with the Reserve Bank's monetary policy statement on Thursday.
But dealers said there were much bigger forces at work at the moment with the risk story playing out in global markets.
The kiwi strengthened against the Japanese currency from 74.20 yen at 5pm from 71.09 at 5pm on Friday.
Against the euro, the NZ dollar was up to 0.4732 from 0.4670, while against the Australian dollar the kiwi rose to A82.06c from A81.70c.
The trade weighted index was 64.55 at 5pm today from 63.36 at 5pm on Friday.
- NZPA
