Kiwi rises against greenback

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The New Zealand dollar gained against the greenback yesterday after China's economic growth exceeded analysts' expectations, stoking demand for higher-yielding currencies, while weak New Zealand business confidence matched market expectations.

The New Zealand dollar traded at US79.84c at 5pm, up from US79.45c at 8am. The trade-weighted index rose to 71.28 from 71.16.

China reported gross domestic product rose 8.9 per cent in the fourth quarter from a year earlier, according to the statistics bureau in Beijing. This was above the 8.7 per cent median forecast in a Bloomberg survey of 26 economists. Industrial production in December also increased 12.8 per cent on the same period last year.

"Today's little pop up [of Chinese data] is getting people excited," said Alex Hill, manager of Corporate FX at HiFX. "It is slightly better than expected - but it is still fairly illiquid trading with the US holiday still in effect."

In New Zealand, local trading activity slowed and business confidence dimmed in the December quarter as the flurry of work after the Christchurch earthquakes returned to normal levels. The New Zealand Institute of Economic Research survey, released yesterday morning, showed firm's own activity slowed to a negative 4 per cent from a 1 per cent expansion in September.

"It has been difficult to drag the kiwi around off domestic data," with the survey showing again that local statistics are failing to have any "massive effect" on the New Zealand dollar, Hill said.

In Europe, the European Financial Stability Facility is selling €1.5 billion worth of bonds after having its rating cut to AA+ from AAA by ratings agency Standard & Poor's yesterday morning. Spain and Greece will also offer debt today and tomorrow, while Portugal will sell bills today.

The kiwi dollar fell to €62.67c from €62.72c and to A76.79c from A77.02c. It gained to 51.97p from 51.85p and 61.26 from 60.94.