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NZ Dollar Up Against Greenback, Yen As Risk Appetites Improve

Contributor:
Fuseworks Media
Fuseworks Media

Wellington, May 13 NZPA - The New Zealand dollar has strengthened against the greenback and yen as risk appetites improved and some investors looked to lock in profits.

By 8am today the kiwi was buying US77.09c against the greenback, having been down around US76.25c yesterday evening -- its lowest level in nearly four months.

Bank of New Zealand currency strategist Danica Hampton said a rebound in US equities overnight and improving risk appetite had reinvigorated appetite for carry trade currencies such as the NZ dollar against the yen.

In carry trades, investors borrow against the yen or other low-yielding currency to buy assets offering higher returns.

At today's local market open, the kiwi was buying 80.12 yen, having been at a six-week low of around 78.50 yen at lunchtime yesterday.

Among the big currencies, the US dollar rose overnight against the Japanese yen and Swiss franc as a dip in oil prices and unexpectedly strong earnings from HSBC encouraged the move to riskier assets.

The euro vaulted up against the yen, helping the euro zone currency erase losses against the dollar.

Ms Hampton said that along with the improving appetite for risk, after four consecutive down days for the NZ dollar against the greenback, many investors had been itching to lock in profits on short NZ dollar positions.

Against the Australian dollar the kiwi continued to bump along at low levels, getting down to its lowest levels in more than 19 months around A81.30c.

At 8am today the kiwi was buying A81.39c, having been squeezed in tight ranges between A81.30c and A81.70c since early Friday.

Against the euro the NZ dollar was buying 0.4961 at the local open, down from 0.4965 at 5pm yesterday. The trade weighted index lifted to 68.83 by 8am from 68.56.

NZPA WGT Reuters mjd kn

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