KEY POINTS:
Buyers snapped up the New Zealand dollar as equity markets recovered from a five-week low touched early in the Easter break.
It closed on US80.15c from around US78.70c on Friday.
Although it lost ground to the aussie today, it still closed nearly half a cent up at A88.00 from its level before Easter.
Equities improved when better-than-expected US housing data revived optimism towards the world's biggest economy.
The US currency had rallied yesterday and extended its recovery from a 13-year low against the yen also after news that JPMorgan had raised its offer for Bear Stearns, which lifted Wall Street and improved investor confidence.
Despite this, most investors refrained from returning to risky trades like the kiwi as such recoveries in risk appetite have proved to be short-lived since the credit market crisis erupted last August.
"The dollar's rebound at this stage looks within a natural rebound often seen after panic selling," said Minoru Shioiri, chief manager of forex trading at Mitsubishi UFJ Securities.
"Those who needed to sell the dollar have done so by now, making room for the dollar to rise a bit."
In New Zealand, consumer confidence dropped during the March quarter to its lowest level in a decade, a new survey showed.
The Westpac McDermott Miller consumer confidence index fell to 96.5 from 110 in December.
Westpac economist Donna Purdue said rising food and petrol prices, high mortgage interest rates, drought, falling house price inflation, and turmoil in global financial markets, were painting a grim picture.
"Even so the extent of the fall in confidence this quarter has left us stunned."
The trade weighted index closed on 71.63 from 71.36 on Thursday evening.
Reuters currency rates:
5pm today 5pm Thursday
NZ dlr/US dlr US80.15c US80.12c
NZ dlr/Aust dlr A88.00c A87.54c
NZ dlr/euro 0.5160 0.5139
NZ dlr/yen 80.40 79.52
NZ dlr/stg 40.26p 40.47p
NZ TWI 71.63 71.36
Australian dollar US91.08c US91.55c
Euro/US dollar 1.5548 1.5599
US dollar/yen 100.32 99.14
- NZPA