The New Zealand dollar edged up against the greenback, with traders weighing the potential for risk aversion to flare in the wake of Japan's 8.9 magnitude earthquake and tsunami waves.
The New Zealand dollar fell to 60.88 yen from 61.06 yen on Friday in New York, as the Japanese government
pulled in overseas funds to prop up their liquidity position in the wake of the disaster.
The kiwi recovered ground against the US dollar after falling last week when the Reserve Bank of New Zealand slashed the official cash rate to 2.5 per cent in an attempt to prop up business confidence in the wake the most recent earthquake in Christchurch, an event now eclipsed by Japan's quake.
"As the news of the earthquake in Japan came there was not a lot of movement in the kiwi with the focus on the Japanese yen," said Khoon Goh, head of market economics and strategy for ANZ New Zealand. Traders are watching to see if events in Japan "trigger risk aversion and what it might do to the global recovery story,"
The kiwi rose to 74.22 US cents from 73.76 cents in New York on Friday, and rose to 65.59 on the trade-weighted index of major trading partners' currencies from 65.23. It fell to 73.13 Australian cents from 73.38 cents on Friday. It rose to 53.41 euro cents from 53.11 cents at last week's close, and climbed to 46.11 pence from 45.71 pence.
Goh said risk aversion will likely remain a key theme this week, with the conflict in Libya and rising concerns around sovereign debt defaults in Europe.
"Those haven't gone away, they've just been pushed off the front page," Goh said.
The New Zealand dollar is likely to trade in a range of between 73.95 US cents and 74.62 cents today, he said.
