NZ dollar rises to post-float high

Photo / Dean Purcell
Photo / Dean Purcell

The New Zealand dollar rose to its highest level against the greenback since it floated in March 1985 on improving risk sentiment and talk of Asian funds' interest in assets such as government bonds.

The kiwi climbed to 82.16 US cents from 81.58 cents on Friday in New York, eclipsing the previous post-float high on March 14, 2008, of 82.13 cents. It rose as high as 70.88 on the trade-weighted index from 70.54 last week.

The Reserve Bank last intervened in currency markets when the TWI was in a range of between 72 to 73.

The currency extended its gains after government figures showed the nation's trade surplus rose to a record in April, reflecting continued demand for the nation's meat, wool, dairy and forest products from buyers such as China.

The kiwi dollar extended its gains as traders who had been betting the currency was set to decline were forced to buy back their short positions.

"We've seen a modest improvement in risk sentiment and talk of potential reserve manager flows, and pressure on speculative shorts," said John Horner, currency strategist at Deutsche Bank in Sydney. "This is a continuation of the moves we've seen over the last few days."

Horner said the direction of the kiwi dollar from here will depend on the outlook for the US dollar, with American employment data due at the end of the week, and investors will be watching for any developments on Europe's sovereign debt crisis.

Greek Prime Minister George Papandreou has vowed to push on with unpopular austerity measures and asset sales to alleviate the nation's debt burden after failing to win the backing of opposition parties for the plans.

- BusinessDesk

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