NZ dollar drifts after rise to five month peak

File photo

The New Zealand dollar drifted today after peaking at a new five-month high.

By 5pm the NZ dollar was at US78.54c from US78.38c at 8am and US77.83c 5pm.

It dropped to below US77.50c in mid-afternoon trading yesterday after radiation leaks at the Japanese nuclear plant were given a more serious rating of seven out of a scale of seven, the same as the disaster at Chernobyl but has now recovered the lost ground.

The NZ dollar rose to around US78.80c early today but then drifted off.

"When we came in this morning the kiwi was trading near its lows and that was just a bit of a commodity story," said Mike Hollows, director of trading at HiFX.

But the NZ dollar was still benefiting from a weak US dollar and this was the underlying story.

Equity markets failed to provide much direction today.

"Although kiwi has come a hell of a long way really quickly there is not a lot of resistance to moves higher. Support is easier to see around US77.50c so we have some pretty wide parameters now," Mr Hollows said.

ANZ said that perhaps the NZ dollar was being viewed as a safe haven given this country's nuclear free status and position as a major food exporter.

Also it was possible comments yesterday by Reserve Bank Governor Alan Bollard about the exchange rate might have gained some attention.

The kiwi climbed above A75c against the aussie today for the first time in seven weeks, and was A75.00c at 5pm, up from A74.64c yesterday.

The NZ dollar was at 66.05 yen from 65.35 yesterday, and was slightly higher at 0.5426 euro. The trade weighted index was at 68.30 from 67.78 yesterday.

- NZPA