The New Zealand dollar rose after the Reserve Bank left the official cash rate unchanged at 2.5 per cent on relief that the central bank did not paint a bleaker picture of the economy.
The kiwi dollar was at 79.75 US cents, up from 79.46 cents just before the decision and from 79.51 US cents at 8am. It was 79.57 US cents at 5pm yesterday. The kiwi fell from 79.84 cents to 79.20 cents between 3am and 5am, reflecting moves in the euro at that time.
"It was pretty much a cut and paste from the September statement," said Imre Speizer, market strategist at Westpac. The market had priced in a worse scenario so the currency was responding to this.
Bollard said there was "a real risk that the European sovereign debt crisis could cause a further slowing in global activity, putting downward pressure on New Zealand's commodity export prices."
The kiwi had risen close to 80 US cents when the euro was weak but the euro turned around, said Alex Sinton, senior deal at ANZ New Zealand said before the RBNZ move.
