NZ dollar surges as risk appetite returns

The New Zealand dollar was sharply higher today but it ended off its best levels ahead of a long weekend in both the United States and United Kingdom markets.

The NZ dollar surged higher on Thursday as a global stocks rally buoyed risk appetite.

Investors were also reassured after China said Europe remained a key investment market for its foreign-exchange reserves, and that a Financial Times report that Beijing was concerned about its euro zone bond holdings was groundless.

Around 8am the NZ dollar was buying US68.37c from US66.84c at 5pm yesterday. It went on to trade as high as US68.60c before easing to US68.04c at 5pm today.

"Everything turned around in the bourses overnight through Europe and with the Dow up. Risk was back on the table," said Murray Hindley, chief foreign exchange dealer at ANZ.

The Dow Jones industrial average rose 2.85 percent on Thursday after China denied that it was reviewing its euro-zone bond holdings, Reuters reported.

Mr Hindley said the currency drifted lower in afternoon trading.

Markets are expected to remain volatile. The US market has the Memorial Day holiday on Monday and there is also a bank holiday in the UK.

The New Zealand dollar has pushed to its highest level in a week against the greenback, euro and yen.

By 5pm it was 61.98 yen from 60.27 yesterday, and 0.5530 euro from 0.5450.

The trade weighted index rose to 65.97 at 5pm from 65.12 yesterday.

- NZPA