The New Zealand dollar gained more than 1 US cent after a successful Spanish bond sales and after the European Central Bank offered more support for the region's lenders, easing concern Europe's debt crisis is worsening.
The kiwi dollar rose to 76.83 US cents at 9:25am, from 75.89 cents at 5pm yesterday. It reached a high of 77.11 cents. The trade-weighted index increased to 68.75 from 68.21.
Spain sold $5.6 billion euros of three-month and six-month bills, exceeding the maximum target of $4.5 billion euros, while the European Central Bank said it will give banks two opportunities to borrow money at 1 per cent. In Germany, Europe's largest economy, business sentiment rose in December, based on a monthly survey of some 7000 companies.
"It's all rosy out of Europe - but trust me the money won't be going anywhere but the banks," said Tim Kelleher, head of institutional FX sales NZ ASB Institutional.
The rise in the kiwi is being viewed as a relief rally, "it is safe-haven buying. If you are going to park your money somewhere over Christmas it may as well be here," Kelleher said.
