The New Zealand dollar rose today in defiance of the Reserve Bank of New Zealand's latest attempt to talk it down.
The NZ dollar fell as low as US64.75c yesterday when the Reserve Bank said it would reassess policy settings if the economic recovery was put at risk. The central
bank held its official cash rate unchanged at 2.5 per cent.
The NZ dollar recovered to US65.68c at 5pm from US64.95c at the same time yesterday.
The Australian dollar was also strong today. It rose to US82.93c from US81.76c at the same time yesterday.
"I think yesterday's short market has been squeezed here this afternoon," said ANZ Institutional Bank chief foreign exchange dealer Murray Hindley.
He said a stronger Australian dollar and stronger euro were also features of the session. There was no follow-through selling of the NZ dollar overnight. The central bank and others have noted that the NZ dollar's strength could choke off the recovery by reducing returns to exporters. AMP Capital said last week that the currency has risen much earlier compared to other economic upswings.
The recovery by the NZ dollar today also came as the US currency slid against major currencies as global stocks and commodities rebounded on optimism about an economic recovery worldwide.
Against the Australian dollar, the NZ dollar troughed on Thursday night at a four-week low around A78.80c and by 5pm had recovered to A79.23c, which compared to A79.44c yesterday.
ANZ said that despite the Reserve Bank's messages the NZ dollar remained coupled with wider global sentiment and risk appetites.
"With Wall Street up strongly overnight on better economic data and further positive earnings surprises ... and commodities rebounding strongly after yesterday's tumble, the kiwi naturally found some buying interest."
The NZ dollar was buying 0.4647 euro at the local close from 0.4623 yesterday and was up to 62.62 yen from 61.67. The trade weighted index was 61.42 at 5pm from 61.01 yesterday.
- NZPA
