NZ dollar regains some ground against euro

Tuesday 25th January 2011

The New Zealand dollar regained some ground against the euro after falling to a five-week low around 0.555 euro yesterday morning.

At 8am today the kiwi was buying 0.5602 euro from 0.5581 at 5pm yesterday, and was also up against the greenback to US76.43c from US75.90c.

ANZ bank said rallying equity markets had helped the NZ dollar back above US76c in overnight trade.

The euro had pared back gains as risk appetite returned to the market and the NZ dollar took its opportunity to claw back some recent losses.

Reuters reported the euro rose for a fifth straight session against the US dollar, hitting a two-month high near US$1.37 as expectations of higher euro zone interest rates sparked traders to push the currency above important technical levels.

Political turmoil in Ireland again highlighted problems in indebted euro zone countries and a suicide bombing at Russia's biggest airport capped the European currency's rise.

But the euro gained momentum in the New York session, and traders said tough talk on inflation from European Central Bank President Jean-Claude Trichet was a catalyst driving it to its highest level since November.

The NZ dollar dropped to a two-week low around A76.30c early today, and by 8am was at A76.47c, down from A76.80c at 5pm.

The kiwi rose to 63.03 yen from 62.80, while the trade weighted index was up to 68.09 at 8am from 67.90 at 5pm.

The Reserve Bank of New Zealand is due to review the official cash rate on Thursday, which ANZ expects to be a "fairly muted affair", and which BNZ currency strategist Mike Jones said was "primed to be devoid of drama".

NZPA

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