NZ dollar recovers as currencies rally

The New Zealand dollar made its way slowly but surely higher today after it was knocked down this week by a gloomier than expected Reserve Bank of New Zealand (RBNZ) statement.

But it lost ground against an unrelentingly strong Australian dollar.

The NZ dollar was US73.00c at 5pm, up from US72.49c at 8am and US72.46c at 5pm yesterday. It had fallen to US72.17c on Thursday night.

Dealers attributed the strength to a range of factors, including a stronger Australian dollar and a lack of intervention in the yen.

"Those who were short yesterday after the monetary policy statement have bought back going into the weekend," one dealer said.

The US stock market was mildly positive, paving the way for the quiet rally today in currency markets.

A New Zealand government bond tender was also well bid today. The Tokyo market has a holiday on Monday.

The RBNZ kept the official cash rate at 3 per cent yesterday and signalled a longer pause in rate increases than expected.

BNZ markets strategist Mike Jones said the NZ dollar remained vulnerable to a test of support in the US71.55c to US71.75c window, which it had traded above since earlier this month.

Against the Australian dollar the kiwi slumped to a five-month low around A77.10c on Thursday night, but by 5pm today it had edged back to A77.27c.

The NZ dollar also fell to a fortnight low 0.5513 euro early today, then nudged back up to 0.5560 at 5pm, from 0.5576 yesterday.

It was 62.60 yen from 61.90 yen yesterday.

The trade weighted index rose to 67.04 at 5pm from 66.83 yesterday.

- NZPA