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NZ Dollar Powers To Multi-month Highs

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, June 2 NZPA - The New Zealand dollar powered to multi-month highs against major currencies, boosted with other commodity-related currencies by a jump in oil prices and a rise in United States stocks.

Against the greenback the kiwi peaked near US65.65c around 6am, but then fell back rapidly to US65.19c by 8am. In a stellar performance since mid-afternoon on Thursday the NZ dollar gained about US4c from around US61.30c.

BNZ Capital currency strategist Danica Hampton said heightening hopes of a global economic recovery were enabling commodity currencies such as the Australian, Canadian and NZ dollars to outperform.

At the same time the sentiment for a weaker US dollar continued to dominate foreign exchange markets, she said.

But from a fundamental perspective, the bank's analysis showed the kiwi over-stretched against the greenback.

The rally in the NZ currency had outpaced the increase in risk appetite, New Zealand commodity prices and NZ-US three-year swap spreads, Ms Hampton said.

"Nor should we forget that the rapid strengthening of the currency and effective tightening of financial conditions is a potential threat to NZ's economic recovery."

Along with its gains against the greenback, the NZ dollar rose to a seven-month high against the Japanese currency, peaking around 63.30 yen, before easing to 62.98 yen at 8am, from 60.60 yen at 5pm on Friday.

The kiwi hit a 6-1/2-month high against the European currency near 0.4620 euro, then slipped to 0.4605 euro by the local open from 0.4490 on Friday evening.

Against the Australian dollar, the kiwi climbed to a seven-week high near A80.70c, from A79.55c at Friday's local close, and by 8am was at A80.39c. The trade weighted index was 61.34 at 8am from 59.76 at 5pm on Friday.

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