NZ Dollar: Kiwi strengthens as risk appetite recovers

The New Zealand dollar has strengthened against major currencies as risk appetite recovered.

In the United States stocks rose after Treasury Secretary Timothy Geithner indicated most banks had sufficient reserves to protect against possible losses, sparking a rebound in bank shares.

By 8am the New Zealand dollar was buying US56.32c from US55.67c at 5pm yesterday, having briefly dropped below US55c for the first time in a month early yesterday.

BNZ Capital currency strategist Danica Hampton said the dramatic start to the week for the NZ dollar with the rush to US55c eventually drew out a healthy mix of offshore investor demand as well as onshore commercial and institutional buyers.

Across the board currencies were mildly firmer as risk appetite recovered, once again market sentiment showing itself to be fluid and easily diverted by media and data releases, she said.

ANZ said risk was back on the table after taking flight yesterday. The NZ dollar move higher was largely on the coat tails of the Australian dollar, with that cross trapped in a tight range.

The NZ dollar was at A79.07c at the local open from A79.24c at 5pm, while the kiwi was buying 0.4351 euro at 8am from 0.4300.

The kiwi also rose to 55.58 yen from 54.72 at 5pm, as the trade weighted index lifted to 56.49 at 8am from 55.91.

The euro rose against the US dollar and yen as data showing sharp improvement in German investor confidence lifted stock markets and encouraged market participants to wade back into higher-risk trades.

Uncertainty about the European Central Bank's next monetary policy move, however, trimmed euro gains against the US dollar.

Also, an International Monetary Fund warning that banks may have to write down more than US$4 trillion ($7.3 trillion) in asset values added a dash of anxiety to trading.

- NZPA