The New Zealand dollar started today's local session well down against a strong Japanese yen, but managed to claw back some ground during the session.
The yen rose over the weekend after incumbent Prime Minister Junichiro Koizumi's party won a landslide victory in Japanese elections. While analysts had expected the win, the margin of the victory was seen as positive for the yen, as it gives Mr Koizumi a strong mandate to continue the economic reform process.
The kiwi started today's local session at 77.30 yen, down from 77.90 yen at 5pm Friday. But by 5pm today the New Zealand dollar had clawed its way back to 77.41 yen.
The kiwi gained against the euro which is floundering amid uncertainty over the outcome of Germany's upcoming election.
At 5pm today the kiwi was fetching 0.5733 euro, up from 0.5670 euro at 5pm Friday.
BNZ currency strategist Sue Trinh said the kiwi had also benefited from an improvement in investors' risk appetite.
"There seems to be some evidence of carry trades, or basically investing in a high yielding currency and borrowing in a low yielding currency," she said.
The kiwi continued to range trade against the US dollar, with a low of US70.55c and a high of US70.92c. At 5pm the kiwi was sitting at US70.70c.
On the domestic front, the kiwi was basically unmoved after the release of the latest terms of trade index, which measures how many goods can be imported for every dollar of exports. The index showed a 1 per cent fall in the June quarter, in line with economists' expectations of a fall of between 0.8 per cent and 1.2 per cent.
The terms of trade data was the first release in a busy week on the local data front. Apart from the general election this Saturday, the main domestic focus will be Thursday's Reserve Bank meeting.
While analysts expect the official cash rate to remain unchanged at 6.75 per cent, they expect the Reserve Bank to remain hawkish.
Other data due this week includes the latest job ad figur es, July retail sales figures, housing data, food prices and the manufacturing PMI.
- NZPA
<EM>Currency:</EM> Kiwi dips, then starts recovery against strong yen
AdvertisementAdvertise with NZME.