The New Zealand dollar rose on news that credit rating agency Standard & Poor's has upgraded the outlook on New Zealand's credit rating to stable from negative.
Prior to that move the NZ dollar had drifted lower from around US61.50c to US61.20c in reaction to the budget. When the newsof the improved outlook for the rating broke the currency immediately jumped to US61.80c.
By 5pm it was US61.72c from US62.15c yesterday.
"The change in the outlook on the foreign currency rating reflects our view that the measures announced in today's budget will support stabilisation in the government's fiscal position over the medium term," said S&P credit analyst Kyran Curry.
The budget was seen by commentators as prudent with no surprises. It delayed tax cuts and government contributions to KiwiSaver but did not cut welfare entitlements.
ANZ Bank chief foreign exchange dealer Murray Hindley said the currency was trading toward the bottom of the session's range prior to the Standard & Poor's announcement.
He said the NZ dollar was already weaker ahead of the budget after the US stock market closed lower.
Derek Rankin of Rankin Treasury said the Hong Kong market was closed today, reducing trading Asia.
Government debt levels in New Zealand were "way better than virtually anywhere", he said.
The NZ dollar was at 59.50 yen at 5pm from 59.30 yesterday, and at 0.4466 euro from 0.4445 yesterday.
Against the Australian dollar the kiwi was up to A79.45c from A78.96c, while the trade weighted index rose to 59.12 at 5pm from 59.08.
