Friday, March 19, 2010

Kiwi dollar at two- year high against euro

The New Zealand dollar climbed to a two-year high against the euro, as worries persisted about Greece's debt problems.

The kiwi peaked at 0.5256 euro early today, according to Reuters data, and by 8am was only a little lower at 0.5249, up from 0.5199 at 5pm.

The latest indication of Greek problems came in a report in which an unidentified Greek official said Greece was increasingly pessimistic about the prospect for receiving assistance at a March 25 European Union summit and may seek International Monetary Fund aid during the April 2-4 Easter weekend.

After a bumpy night against the greenback, the NZ dollar was buying US71.48c at the local open, from US71.33c at 5pm, while it also nudged upward to 64.56 yen from 64.33 at the local close.

Against the Australian dollar, the kiwi reached a 2-1/2-week high A77.77c, from A77.28c at the local close, and by 8am was at A77.57c.

The NZ dollar is trudging away from its lowest level against the aussie in more than nine years, A76.10c, reached a fortnight ago.

The trade weighted index rose to 65.89 at 8am from 65.59 at 5pm.

BNZ strategist Mike Jones said the key theme in currency markets overnight was US dollar strength. Fresh concerns about Greece's expanding deficit prompting renewed demand for safe haven assets, supporting the greenback and yen.

Despite that, the kiwi managed to buck the firming US dollar trend.

Solid demand for the NZ dollar against the US currency came from both macro and leveraged accounts. Combined with further recovery in the NZ dollar against the aussie ensured dips by the kiwi against the US dollar were limited to around US71.20c, Jones said.

Markets appeared to have come around to the view that a NZ dollar below A77c was unjustified on the basis of this country's economic fundamentals.


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