Currency: Dollar gains on US ahead of rate decision

The New Zealand dollar rose today as attention turned to tomorrow's interest rate decision by the Reserve Bank of New Zealand (RBNZ).

By 5pm today the NZ dollar was buying US63.10c, up from US61.86c at 5pm yesterday. The currency rose above the US63c figure late in the domestic session, having gained earlier, care of a weak US dollar.

The NZ dollar was down to A78.25c from A78.50c at yesterday's local close.

The US dollar weakened overnight as investors questioned whether the US economy had improved enough to justify talk of higher US interest rates by year end.

But the greenback was relatively quiet in the Asian session as investors waited for the release of the Federal Reserve's Beige Book of regional economic conditions.

An auction of 10-year Treasuries, or US bonds, on Wednesday US time, is also being seen as a test of investors' confidence.

In New Zealand, opinion is divided on whether the RBNZ will cut the official cash rate from the current 2.5 per cent. The decision is released at 9am tomorrow.

Banks are being accused of not passing on cash rate reductions ahead of the decision, which ratcheted up the political backdrop.

The NZ dollar rose to 0.4478 euros from 4460 yesterday, and gained to 61.55 yen from 60.70. The trade weighted index rose to 59.66 at 8am from 59.10 yesterday.

Currency rates:

NZ dlr/US dlr US63.10c US61.86c

NZ dlr/Aust dlr A78.25c A78.50c

NZ dlr/euro 0.4478 0.4460

NZ dlr/yen 61.55 60.70

NZ dlr/stg 38.67p 38.62p

NZ TWI 59.66 59.10

Aust dlr/US dlr 80.59c 78.81c

Euro/US dlr 1.4085 1.3871

US dlr/yen 97.59 98.12

- NZPA