Dollar rises to week high as commodity currencies return to favour

The kiwi touched 63.46 US cents overnight and was trading at 64.19 cents at 8am in Wellington, from 63.77 cents at 5pm yesterday.  Photo / iStock
The kiwi touched 63.46 US cents overnight and was trading at 64.19 cents at 8am in Wellington, from 63.77 cents at 5pm yesterday. Photo / iStock

The New Zealand dollar rose to a week high as commodity-linked currencies returned to favour after European Central Bank president Mario Draghi signalled a willingness to ease policy further to stimulate growth.

The kiwi touched 65.37 US cents and was trading at 64.95 cents at 8am in Wellington, from 64.35 cents at 5pm yesterday. The trade-weighted index advanced to 71.68 from 71.20 yesterday.

Investor sentiment improved after European Central Bank president Mario Draghi suggested the ECB might add monetary stimulus as soon as the central bank's next policy meeting in March. That fuelled a recovery in European and US stock markets, and spurred a rebound in oil prices. Commodity currencies benefited.

"A rebound in oil prices and hints of further easing by ECB President Draghi led a rise in risk appetite and this has supported commodity currencies over the past 24 hours," Bank of New Zealand currency strategist Jason Wong said in a note. "With the rebound in commodity prices and improved market sentiment, the New Zealand dollar has been one of the best performing currencies."

See live rates for the NZ-US $ below. Click for more information:NzForex Foreign Exchange Transfers

China also signalled it will keep doing what's necessary to stem a slide in its stock market. Calling the country's market "not yet mature," China's Vice President Li Yuanchao told Bloomberg that the government would boost regulation in an effort to avoid too much volatility.

The New Zealand dollar lagged behind other commodity currencies, slipping to 92.92 Australian cents from 93.09 cents yesterday, and easing to 92.88 Canadian cents from 93.18 cents.

The kiwi rose to 59.67 euro cents from 59.10 cents yesterday, gained to 45.68 British pence from 45.40 pence, increased to 76.32 yen from 75.35 yen, and advanced to 4.2733 yuan from 4.2329 yuan.

- BusinessDesk

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