Currency: NZ dollar rises after OCR lift

The New Zealand dollar rose sharply today after the Reserve Bank of New Zealand raised the official cash rate and after strong Australian employment data and strong Chinese export data.

The NZ dollar was at US67.80c at 5pm, up from US66.58c at 8am and US66.15c at 5pm yesterday.

The hike in the official cash rate by 0.25 percentage points to 2.75 per cent was expected and it helped the currency's reputation as a high-yielding investment.

While strong Australian employment data and an official report that China's May exports rose 48.5 per cent over year earlier improved investors' appetite for high-yielding currencies.

The Australian dollar rose to US83.80c at 5pm from US82.07c at the same time yesterday after Australia's unemployment rate was a seasonally adjusted 5.2 per cent in May, and total employment rose by 26,900 to 11.057 million in May, seasonally adjusted.

The rise in employment was more than the 15,000 forecast by economists and the unemployment rate was lower than the 5.4 per cent forecast.

Imre Speizer, senior currency strategist at Westpac, said the NZ dollar got more of a lift from the foreign data than from the local rate rise.

There was a lack of follow through response to the rate rise when traders were confused by headlines from television interviews of Reserve Bank of New Zealand Governor Alan Bollard suggesting the central bank was very cautious on further rate rises

"It caused quite a big pull back in the market," Mr Speizer said. The central bank was actually likely to keep hiking unless the world economy turned sour.

The NZ dollar was at 0.5627 euro at 5pm from 0.5542 at the same time yesterday. It was at 61.81 yen from 60.50 yen yesterday.

It was little changed against the Australian dollar at A80.87c at 5pm from A80.57c yesterday.

The trade weighted index was 66.32 at 5pm from 65.28 yesterday.

- NZPA