Currency: NZ dollar peaks vs greenback

The New Zealand dollar climbed to a three-week high against the greenback early today before falling away as safe-haven buying was reignited for the United States currency.

The kiwi topped US58.60c briefly around 1.40am and by 8am was down to US58.02c, still ahead of the US57.67c at 5pm yesterday.

BNZ Capital currency strategist Danica Hampton said much of the recent strength in the NZ dollar against the greenback was attributable to improving global sentiment, with investors becoming hopeful the global economy was on the road to recovery.

But currency market moves in recent days had tended to be exacerbated by model and technical-driven funds, she said.

"However, from a fundamental perspective, the recent gains in NZD/USD look unsustainable."

The NZ dollar also gained against other major currencies, rising to 0.4355 euro at 8am from 0.4315 at 5pm and up to 98.97 yen from 98.75.

Against the Australian dollar the kiwi lifted to A78.13c at the local open from A77.97c, having risen to around A78.40c early today, the highest level since the Reserve Bank lowered New Zealand interest rates last Thursday.

A modest rise in the NZ dollar against the aussie throughout the night up to the peak followed the Reserve Bank of Australia's decision to leave that country's interest rates on hold at 3 per cent, as expected, although leaving the way open for further cuts if needed.

New Zealand's trade weighted index rose to 57.08 at 8am from 56.76 at 5pm yesterday.

The US dollar rose for the first time in three days against the euro as a pullback in US stocks after a rally in the previous session reignited safe-haven buying for the greenback.

- NZPA