Currency: NZ dollar makes gains

After dipping below US68c for the first time in three weeks the New Zealand dollar finished the week back above US69c.

It was at US69.40c at 5pm today from US69.02c at 8am and US68.10c at 5pm yesterday. It fell to US67.91c on Thursday but the recovery from that level fell short of the US71.50c early on Monday.

The week has been dominated by fears about funding of European banks and fears that economic growth will slow in China and the United States. They subsided somewhat today and the NZ dollar firmed throughout the session.

A compromise deal between miners and the Australian government on the issue of tax helped the Australian dollar late this week.

The euro also surged on Thursday in a wild short-covering rally and equity markets were firm on Friday. The US dollar was on the defensive after weak data and as investors waited for further data.

BNZ said that since the global financial crisis began to bottom out around March last year the NZ dollar has been one of the strongest performing G10 currencies. It has been trading well above its long-run equilibrium around US61c.

BNZ said the NZ dollar could hold up a bit longer as New Zealand economic growth should outstrip US growth for the next six to nine months but it could begin turning lower from around the end of this year.

The NZ dollar was at 0.5546 euro at 5pm from 0.5575 euro at the same time yesterday, but strengthened to 61.01 yen from 60.10.

Against the Australian dollar, the NZ dollar rose to A81.86c from A81.47c yesterday, while the trade weighted index rose to 66.48 from 66.00 yesterday.

- NZPA