The Australian and New Zealand dollars rose yesterday amid reports US lawmakers are nearing agreement on a rescue plan for the motor industry.
Asian stocks also climbed in the wake of US President-elect Barack Obama's pledge to undertake the biggest public works programme in about 50 years.
"The
equity market's rebound is encouraging the aussie up," said Joe Capurso, a currency strategist at Commonwealth Bank of Australia, the nation's biggest mortgage lender.
"The reality is that the world economy is in very poor shape and that's typically bad news for the aussie."
Australia's currency rose to US65.32c yesterday, up from Friday's close of US64.42c.
New Zealand's dollar advanced to US53.45c during trading and reached 49.58 against the yen.
The currencies advanced as US lawmakers approached agreement on bridge loans for General Motors and Chrysler to help the carmakers survive this month. Obama said at a weekend press conference in Chicago that he would boost investment in roads, bridges and public buildings to create and preserve 2.5 million jobs.
The ASX closed up 4.06 per cent yesterday while Japan's Nikkei average climbed 5.2 per cent. The NZX-50 closed slightly lower.
The NZ dollar ended up at US53.24c by 5pm, down slightly from US53.37c on Friday.
Early on Saturday it dropped to around US52c, its lowest level in six years apart from a lower dip two weeks ago.
Bank of New Zealand currency strategist Danica Hampton cited renewed fears of a deep and prolonged global recession after news that US employers cut payrolls by 533,000 in November.
But a sharp recovery in US stock markets helped revive investor confidence and lift the kiwi off its lows.
The international events eclipsed comments by Prime Minister John Key that he believed the NZ dollar could trade below US50c.
- NZPA
