NZ dollar gains vs. greenback, euro

Photo / File
Photo / File

The New Zealand dollar rose against the greenback and reached a record versus the euro on speculation the Federal Reserve will do more to stimulate the US economy and a sales of Spanish bonds met lukewarm demand.

The New Zealand dollar rose as high as 80.54 US cents from 80.05 cents yesterday at 5pm. It traded at 80.33 cents just before 8am. The kiwi rose as high as 65.62 euro cents, the most since the single currency entered circulation in 2002, up from 65.15 cents yesterday. It traded recently at 65.44 cents.

Speculation Fed chairman Ben Bernanke will be forced to boost economic growth increased after sales of existing US homes unexpectedly dropped and manufacturing in the Philadelphia region contracted for a third month. That underscores Bernanke's concerns growth may be too feeble to reduce unemployment stuck above 8 per cent since 2009.

"While he has not put forward the timing on quantitative easing it's just a matter of when," said Alex Sinton, senior dealer at ANZ New Zealand. "On the day the New Zealand dollar will stay in the 80 cent range - I don't know if we can break 80.60."

Bernanke kept open the possibility of more stimulus, including debt purchases under a third round of quantitative easing at his annual congress testimony yesterday.

Demand declined at a Spanish bond sale even as German lawmakers backed a euro-area bailout of the nation's banks. Investors offered to buy 1.9 times the amount offered of two-year notes, down from 4.26 times last month, while demand for five-year securities dropped to 2.06 times from 3.44 in June, Bloomberg reported.

"There is no limit," on the kiwi/euro cross, Sinton said. "The relative performance and expected returns justify more topside as the markets look keen to search out the 66 cent level."

New Zealand's international travel and migration for June will be released by Statistics New Zealand this morning.

The New Zealand dollar was little changed at 76.98 Australian cents from 77.05 cents and was largely unchanged at 51.08 British pence from 51.14 pence. The kiwi increased to 63.13 yen from 62.87 yen. The trade weighted index increased to 72.50 from 72.34.

- BusinessDesk

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