KEY POINTS:
The New Zealand dollar was sold off for much of the day as Japanese exporters bought yen, but closed nearly two US cents higher than Friday.
The kiwi dollar gained ground during the weekend after the US Federal Reserve moved to quash ongoing credit fears by slashing its discount rate on loans to banks.
It rose from US67.15c on Friday to around US69.85c this morning before dropping to a session low of US68.30c mid-afternoon and recovering to a close of US69.13c.
The kiwi gained against the aussie to A86.87c, from A85.97c on Friday.
The TWI crept higher to 67.15 from 65.35.
Westpac market strategy Michael Gordon said the US moves had been "a confidence boosting measure more than anything else".
"It's certainly helped with improving equity markets around the region today but I think it's going to be a short-lived effect."
Meanwhile, fears that $2.5 billion in uridashi and eurokiwi bonds might not be reinvested in New Zealand when they matured today have proven fairly groundless, he said.
"I'd estimated that most of the bonds maturing had already been replaced by new issues," Mr Gordon said.
"For the rest of the month there's still about a shortfall of about $600 million, which is still a sizable amount but not as large as it could have been."
In total, some $3.5 billion bonds are due to mature in August, and Mr Gordon believes about $2.9 billion has been reinvested so far.
He expects the kiwi will test US67c during the week, as concerns about an international credit squeeze remained.
Reuters currency rates:
5pm today 5pm Friday
NZ dlr/US dlr US69.13c US67.15c
NZ dlr/Aust dlr A86.87c A85.97c
NZ dlr/euro 0.5120 0.5005
NZ dlr/yen 79.29 75.30
NZ dlr/stg 34.87p 33.95p
NZ TWI 67.15 65.35
Australian dollar US79.59c US78.12c
Euro/US dollar 1.3499 1.3411
US dollar/yen 114.72 112.12
- REUTERS, NZPA
