Kiwi dollar rallies almost 1USc ahead of ECB lending

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The New Zealand dollar gained almost 1 US cent as investors position themselves ahead of European Central Bank lending and after German lawmakers approved Greek aid.

The New Zealand dollar rose as high as 84.17 US cents overnight from 83.26 cents yesterday at 5pm. It traded at 84.02 cents at 8am.

Investors are speculating that the ECB's second tranche of bank refinancing on Wednesday will help stimulate the region's economy, lifting the prospects for global growth and growth-linked assets including the kiwi dollar. European banks are expected to borrow up to half a trillion euros, tapping a funding line seen as a major pillar in reinvigorating a region mired in too much debt.

If the ECB lending is successful investors will flock to "risk assets or commodity growth currencies like the kiwi - it will test its recent highs," said Dan Bell, currency strategist at HiFX. "There is a lot of repositioning ahead of the ECB meeting with the market looking for a new cash injection."

At the first round of lending in December the ECB provided a record 489 billion euros to banks. It has previously offered banks unlimited 12-month loans.

In Germany, Chancellor Angela Merkel won a parliamentary vote on Greece's 130 billion euro bailout. The vote was pushed through to stave off the collapse of the Greek economy in the face of calls by one of Merkel's cabinet ministers for Greece to be forced out of the 17-nation currency.

Euro-zone leaders are now preparing to meet at a summit meeting in Brussels on March 1.

In the US, figures showed a stronger-than-expected advance in pending home sales. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in January, rose 2 per cent to 97.0, the highest reading since April 2010. December's reading was revised down to 95.1 from a previously reported 96.6.

Economists polled by Reuters had expected signed contracts to advance 1 per cent.

January's durable goods orders and consumer confidence for February are scheduled for release in the US on Tuesday.

In New Zealand, the National Employment Indicator for November and December is set for release today.

The New Zealand dollar rose to 62.73 euro cents at 8am from 61.99 cents yesterday at 5pm. It advanced to 53.08 British pence from 52.60.

The kiwi fell to 78.02 Australian cents from 78.11 and 67.56 yen from 67.68 yen

The trade-weighted index increased to 73.85 from 73.31.