NZ dollar opens stronger after a bad week

The New Zealand dollar regained strength this morning as risk appetite rebounded from last week, when spooked investors moved to safe heaven currencies and dragged the currency to nine-month lows.

At 8am, the kiwi was worth US67.95c, compared to US67.58 at 5pm Friday.

It's a slight improvement from a bad week. The NZ dollar started last week above US70.70c and later fell below US66.50 - it was the biggest weekly drop since October.

BNZ strategist Mike Jones said "global markets were sent into a tailspin on fears that not only is the European debt crisis spreading, but policy markers will impose harsh regulations to cope with it."

"Against this backdrop, model and short-term speculative accounts took flight from 'risk-sensitive' currencies like the New Zealand, and returned to 'safe-haven' currencies like the US dollar and Japanese Yen."

Jones said the New Zealand dollar stabilised against the US dollar after European policy makers said the euro was not in danger.

"Combined with Friday's fierce rally in US financial stocks, this saw risk appetite improve and 'growth-sensitive' currencies like the NZD return to favour."

The kiwi also bounced back from a 10-month low against the yen last week, opening at 61.16 yen at 8am from 60.89 yen at 5pm Friday.

Against the Australian dollar, it went up to A81.31 at 8am from A81.24c at 5pm Friday.

It had closed weaker against the Australian dollar last week after unsubstantiated rumours that the Reserve Bank of Australia had entered the market buying Aussie.

The kiwi was up to 0.5408 euro this morning from 0.5350 Friday and up to 46.92p against the British pound from 46.86 on Friday.

The trade weighted index was up to 65.67 at 8am from 46.86 at 5pm Friday.

- NZPA