NZ dollar climbs against greenback

Photo / Dean Purcell

The New Zealand dollar climbed against the greenback yesterday afternoon and overnight, after having dropped to a two-week low in reaction to a surprise interest rate increase in China that prompted investors to cut risk exposure.

From around US74.30c at its lowpoint, the kiwi was up to US75.50c by 8am today.

Reuters reported that investors had unloaded the US dollar as a report from an influential consultancy said the US Federal Reserve planned to buy US$500 billion of Treasury debt over six months to invigorate a faltering US economy. At one point the US dollar hit a 15-year low beneath 81 yen.

Markets expect the Fed to start pumping money into the US economy as soon as November, a policy known as "quantitative easing," and that has driven the US dollar down since September.

ANZ bank said an offshore freeze on risk yesterday appeared to have thawed easily overnight. Equities reversed the selloff of the previous day, buoyed by better than expected earnings reports in Europe and the US.

"Given the lack of economic data out overnight, earnings and market talk were all that market participants had to go with. So we look to be back in familiar territory, with the US dollar coming in for some treatment, and the NZD and AUD gaining strongly," ANZ said.

The NZ dollar also gained on the Japanese currency, rising to 61.28 yen at 8am today from 60.64 yen at 5pm, while being little changed at A76.55c against the Australian dollar and at 0.5410 euro. The trade weighted index was up to 66.90 at 8am from 66.55 at 5pm.

- NZPA