KEY POINTS:
The New Zealand dollar finished the short holiday week at US77.00c after trading in a narrow band of US76.97c to US77.26.
It looks to be making a comeback after a couple of weeks of losses.
Some commentators said the appetite for risk was blunted by perceptions of political uncertainty following the assassination of Pakistan opposition leader Benazir Bhutto.
The kiwi is considered a risky asset, and is often sold when global concerns emerge.
But others pointed to the high benchmark interest rate of 8.25 per cent rate which is favoured by investors in the "carry trade" borrowing money at low interest rates in markets such as Japan investing in places offering higher returns.
With the US Federal Reserve likely to reduce the US benchmark rate by 0.25 of a percentage point to 4 per cent on January 30, "high yielders" such as the NZ dollar would normally attract extra attention.
The NZ currency has climbed 9.3 per cent against the US dollar since the Fed began cutting borrowing costs on September 18.
The net effect has been for the kiwi to make a comeback, helped by the fact the US dollar was also being sold in favour of safe-haven investments such as gold and the Swiss franc, following Ms Bhutto's assassination in the early hours of the morning (NZ time).
By 8.30am, the kiwi had risen to US77.17c from US76.78c late yesterday, but fell back during the day.
With another week of holiday mode ahead of NZ markets and another couple of weeks of thin volumes in local trade, the NZ dollar is expected to be driven by broader market matters until mid-January.
Against the Australian dollar, the kiwi strengthened to A88.16c from A87.54c, and made up some ground against the yen, to 88.00 from 87.76.
But the trade-weighted index slipped to 71.83 as the kiwi fell against a stronger euro to 52.72 from 53.04 yesterday, a fell a little against sterling to A3; 38.58.
The euro gained against the US dollar to reach US$1.4606 after a US economic report - weaker-than-expected orders for US durable goods - boosted the case for more interest rate cuts next year amid fresh credit worries surrounding US banks.
Currency rates at 5pm
Reuters currency rates:
5pm today 5pm Thursday
NZ dlr/US dlr US76.00 US76.78c
NZ dlr/Aust dlr A88.16c A87.54c
NZ dlr/euro 0.52722 0.5304
NZ dlr/yen 88.00 87.76
NZ dlr/stg 38.58p 38.68p
NZ TWI 71.83 71.94
Australian dollar US87.31c US87.38c
Euro/US dollar 1.4606 1.4485
US dollar/yen 113.39 114.19
- NZPA