NZ dollar rises as US dollar falls

The New Zealand dollar rose today as the US dollar eased against a range of currencies after the Federal Reserve opened the door for further quantitative easing.

The Fed's move eclipsed New Zealand current account data for the June quarter today. The deficit was slightly wider than expected but not enough to move the NZ dollar. The focus is turning to tomorrow's gross domestic report for the second quarter.

The NZ dollar was at US73.59c at 5pm, up from US73.29c at 8am from US72.77c at 5pm yesterday. This is approaching the technical level of US74c.

Imre Speizer, currency strategist at Westpac, said that if the NZ dollar is repelled at the US74c level it will have a downward bias but if it breaks through the next target is US76c.

The Federal Reserve's Federal Open Market Committee voted on Tuesday US time to continue to maintain interest rates at near zero levels. It did not announce more quantitative easing, but signalled it may be compelled to undertake further asset purchases by year's end.

"The committee will continue to monitor the economic outlook and financial developments and is prepared to provide additional accommodation if needed to support the economic recovery and to return inflation, over time, to levels consistent with its mandate," the Fed said.

Mr Speizer said the Fed statement meant it would print money if necessary and this weakened the US dollar.

"Kiwi is going up not so much because risk currencies are going up but that US dollar is being sold," he said.

The Australian dollar rose US95.64c from US94.50c yesterday and reached a two-year high today.

The NZ dollar has been around a five-month low against the Australian dollar, and was buying A76.94c at 5pm from A76.82c at 8am and A77.04c at 5pm yesterday.

The Australian dollar gained against the greenback after the Reserve Bank of Australia said interest rates were likely to rise to contain inflationary pressures from the mining sector.

The NZ dollar was at 0.5537 euro from 0.5557 yesterday. It was at 62.45 yen from 62.26 yen yesterday.

The trade weighted index was steady at 67.08 from 66.85.

- NZPA