The New Zealand dollar rose against most major currencies as more uncertainty in Europe drew offshore investors to the nation's relatively high yields and economic stability.

The kiwi dollar rose to 82.32 US cents from 81.96 cents at 5pm in Wellington yesterday.

The trade-weighted index climbed to 73.28 from 72.95.

The euro weakened after Spain's central bank said the indebted nation's gross domestic product fell this quarter, spurring a selloff in government bonds, underlining the region's debt crisis.


New Zealand interest rates are a standout among strongly-rated nations, with 90-day bank bills trading at 2.67 per cent, compared to 0.106 per cent for US 3-month Treasury bills and 0.03 per cent for German 6-month bills.

"There's real money coming into the kiwi, possibly in a safe-haven attempt," said Stuart Ive, a currency strategist at HiFX. "From an offshore point of view you've got to be looking at the yield. With all the problems in Europe there has been a flight of money."

The New Zealand dollar rose to 79.54 Australian cents, the first time it has broken above 79.50 cents since early April, from 79.14 cents yesterday.

Ive said while both Australia and New Zealand are commodity-exporters, Australia's shipments of raw materials are hard commodities while New Zealand was a food producer.

"The world will still need to eat," he said.

Fonterra Cooperative Group, New Zealand's biggest exporter, yesterday reported a 19 per cent drop in its payout to farmers. Still, annual volumes climbed to 3.94 million tonnes and the Auckland-based company said there has been some recent recovery in prices after they fell to a 34-month low in May.

Traders today will be eyeing the National Bank Business Outlook for September. New Zealand business confidence rose in August, with an increase in construction investment intentions.

The kiwi dollar rose to 63.97 euro cents from 63.65 cents and rose to 50.94 British pence from 50.69 pence. The local currency climbed to 63.93 yen from 63.72 yen.