NZ dollar settles around US75c

The New Zealand dollar was volatile but overall generally firm on a day the market received some unexpected commentary from Reserve Bank of New Zealand governor Alan Bollard.

The NZ dollar traded to a new 15 month high of US75.75c on Tuesday but failed to push higher on Tuesday night and retreated lower when the US dollar recovered.

"It had a go at the high overnight but only got as far as US75.60c and today had a little bit of a go around a flurry on Bollard's comments and got as high as US75.25c," said Imre Speizer, Westpac's senior market strategist.

The RBNZ will review the official cash rate next Thursday and is expected to leave it unchanged at 2.5 per cent. Analysts are predicting the central bank could raise rates by March.

Dr Bollard told Parliament's finance and expenditure select committee today that the high NZ dollar was a "US dollar story".

"If and when we were to increase rates would you see that coming through on the New Zealand dollar? Well, you might, but actually the market's already taken that into account...they are quite a long way ahead.

"I wouldn't necessarily see a big impact that way," Dr Bollard said.

The NZ dollar was US74.97c at 5pm from US74.76c at 8am and US75.33c at 5pm yesterday.

BNZ Capital strategist Mike Jones said that in the past few days the NZ dollar had been caught in a perfect storm of rising risk appetite, increasing commodity prices and weakness in the US dollar.

"However, investors' appetite for risk hit a speed bump last night following signs the US recovery may be more tepid than some had been banking on," he said.

Around 5pm the NZ dollar was buying 0.5021 euro and 67.98 yen from 0.5029 euro and 68.06 yen at 5pm yesterday.

Against the Australian dollar the NZ dollar was little changed at A81.21c, while the trade weighted index was down to 67.09 around 5pm from 67.25 yesterday.

- NZPA