Recovery boosts currency

The New Zealand dollar rose today as evidence that the economy is improving mounted and as the Australian dollar rose to an 11-month high.

By 5pm the NZ dollar was US67.87c from US67.28c at 5pm yesterday. The high of US68.26c today was the highest since early October 2008.

Better-than-expected retail sales data for the June quarter and a report from the Real Estate Institute of New Zealand supported the view that the residential property market is stabilising.

Retail sales rose a seasonally and inflation-adjusted 0.4 per cent in the June quarter.

Some economists argue the Reserve Bank of New Zealand still needs to cut interest rates because the rising currency has tightened monetary conditions, while others argue against a further easing.

The Australian dollar rose to an 11 month high after Reserve Bank governor Glenn Stevens said normal interest rates would be noticeably higher than the current 3 per cent cash rate. It then retreated on lingering doubts about the global recovery.

The NZ dollar was 0.4758 euro at 5pm from 0.4732 at the same time yesterday, and 64.58 yen from 64.57.

Against the Australian dollar, the NZ dollar was A80.58c from A80.48c yesterday, while the trade weighted index rose to 63.10 from 62.78 yesterday.

- NZPA