The New Zealand dollar jumped back over US69c for the first time in a month as it hitched a ride on the back of the euro today.
It closed on US69.10c against its US68.58c close yesterday. The big move was made overnight and trading during the day was relatively subdued.
ANZ Investment Bank dealer Mark Elliott said central bank buying had boosted the euro significantly against the US dollar and the kiwi's rise was less pronounced.
He said the speculation was that the yuan would be pegged to a basket of currencies including the euro and yen instead of just tied to the greenback. That would mean China would need large quantities of euro and yen and less dollars and rumour were swirling that central banks were getting their buying in first.
The big move of the euro created a short squeeze and it would be interesting to see if the latest dollar weakness was long-term or a temporary phenomenon, Mr Elliott said.
Adding to the yuan speculation was a report in London's Daily Telegraph that oil revenue was increasingly being spent in Europe.
"If true, (it) looks to be part of an ongoing trend of diversification of (United States) dollar-denominated oil proceeds," BNZ currency strategist Sue Trinh said.
The euro closed here on US$1.2330 (US$1.2164 late yesterday), while the US dollar fell to 111.08 yen (111.85).
The Australian dollar closed nearly a cent higher on US77.20c (US76.34c at 5pm yesterday).
On its crosses, the kiwi closed on A89.58c (A89.85c), 0.5606 euro (0.5638), 38.88 British pence (38.83), 0.8730 Swiss francs (0.8780) and 76.80 yen (76.71).
The TWI was at 69.30 (69.25) and the monetary conditions index at 973 (968).
On the money market, 90-day bank bill yields rose to 7.05 per cent (7.03), 2009 bond yields were steady at 5.81 per cent, and April 2015s at 5.82 per cent.
- NZPA
<EM>Currency:</EM> dollar jumps back over US69C
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