Kiwi dollar pushes further ahead overnight

The New Zealand dollar pushed higher overnight, after its surge yesterday in the wake of comments from the Reserve Bank that were more hawkish than markets had expected.

From US72.38c at 5pm yesterday, the kiwi peaked at a two-week high near US73.20c about 5.30am, nearly 2c above its level 24 hours earlier. It then eased to be at US72.81c at 8am.

The central bank yesterday kept the official cash rate at 2.5 per cent but said that if the economy continued to recover, conditions may support beginning to remove monetary stimulus around the middle of 2010. That is sooner than it was previously indicating.

Today, Reserve Bank Governor Alan Bollard told Radio New Zealand the shift had been "fairly subtle", and he thought there had been "a bit of an overreaction" to it, particularly on the foreign exchange markets.

The NZ dollar also rose to a three-week high against the Australian and European currencies.

From A79.12c at the local close against the Australian dollar, the kiwi peaked around A79.75c before easing to A79.48c by 8am. From 0.4914 euro it peaked around 0.4970, then slipped back to 0.4948.

The NZ dollar was also up to 64.22 yen at the local open from 63.70 at 5pm, while the trade weighted index climbed to 65.26 at 8am from 64.88 at 5pm.

ANZ bank said the NZ dollar had "found its wings" in the past 24 hours, after being on a steady march lower since the start of the month as global risk appetites deteriorated.

Clearly the Reserve Bank's Monetary Policy Statement yesterday was the catalyst, but strong Australian employment data yesterday and higher stock markets overnight were also likely to have supported at the margin, ANZ said.

A weaker US dollar could not be blamed this time, as the greenback broadly rose a touch overnight.

- NZPA