The New Zealand dollar closed at a healthy 40.23USc yesterday but it will have to prove next week that it can sustain the move.
The reason for the kiwi's jump from its opening price of 39.77c was the Commerce Commission's approval for the much-anticipated Shell-Fletcher Energy purchase. The kiwi leapt to 40.09c about 10 am.
One dealer said that traders initially dragged their feet before momentum took off. "It took a little while to get the head of steam up and there was some reasonably important selling around the figure [40c] area. Initially the knee-jerk reaction was to buy New Zealand dollars but it didn't seem to do too much."
The Shell and Apache offer to Fletcher shareholders, totalling $4.6 billion, will be transacted largely in US dollars. "There is a necessity to buy kiwi at the moment - all the local institutions will be receiving US dollars and they won't want that much exposure on their books so they're buying kiwi on the back of that," the dealer said.
"There are one or two other possible acquisitions in the pipeline so people are slowly buying kiwi and storing it."
The kiwi could take a battering on Monday if a US election result is announced over the weekend.
Both Al Gore and George W. Bush have said they will look at building the strong US dollar, which will have negative implications for both the euro ad the kiwi, a dealer said.
On the cross, the kiwi jumped to 77.21Ac from 76.67c at Thursday's close.
- NZPA
<i>Currency:</i> Kiwi parades above 40USc
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