NZ dollar regains lost ground on Greek reports

The New Zealand dollar fell against the greenback for much of the night before paring losses after sources indicated Greece has reached an agreement with international lenders for a five-year austerity plan intended to avoid looming bankruptcy.

From US81.66c at 5pm yesterday, the kiwi fell to around US80.80c early today, before rising quickly to be at US81.49c at 8am today.

Also, after reaching a post-float high near 51p against the British pound yesterday afternoon, the NZ dollar was at 50.85p at 8am.

The US dollar had gained for much of the overnight session amid uncertainty about a resolution to the Greek debt crisis, and as fears about global growth had investors rushing to safety following a downgraded outlook from the US Federal Reserve.

"Weaker economic data from nearly all parts of the world, namely (the) US, China and Europe, sent investors back into the arms of the low-yielding US dollar," said Kathy Lien, director of currency research at GFT Forex in New York.

The US data showed the number of Americans filing new claims for unemployment benefits rose more than expected last week, while sales of new single-family homes fell for the first time in three months in May.

Adding to the gloomy outlook, private-sector activity slowed in China and Europe this month, according to purchasing managers' indexes.

Also, the International Energy Agency said it would release 60 million barrels of oil from strategic stockpiles to help the global economy by pushing down the price of oil. The announcement created little buying for high-yielding currencies.

European Central Bank President Jean-Claude Trichet said the warning lights were flashing red on the euro-zone debt crisis, leading some to question whether the ECB will continue with its monetary tightening cycle.

The NZ dollar was buying 0.5714 euro at 8am, little changed from its level at 5pm. It was the same story against the Australian and Japanese currencies, with the kiwi at A77.40c and 65.64 yen at 8am. The trade weighted index was 70.65 at 8am from 70.70 at 5pm.

- NZPA