Dollar gains on Dubai's bailout

The New Zealand dollar strengthened against major currencies as Abu Dhabi's decision to throw neighbour Dubai a $US10 billion ($NZ13.73b) lifeline to repay debts slowed safe-haven buying that boosted the United States currency last week.

By 8am today the kiwi was buying US72.82c, having come within a whisker of US73c a little over an hour earlier. At 5pm yesterday it had dipped to US72.18c.

ANZ bank said attempts by the NZ dollar to move lower yesterday were thwarted by demand just above US72c.

The overnight Abu Dhabi rescue package for Dubai ensured the ``risk on'' switch was flicked lifting the NZ dollar briefly to its high, ANZ said.

BNZ Capital strategist Mike Jones said that as demand for riskier assets had improved, investors went back to selling the US dollar and buying growth-sensitive currencies such as the NZ dollar.

The kiwi surged from 63.80 yen to 64.60 yen in the wake of the Dubai announcement, paving the way for more broad-based NZ dollar gains later in the night, Mr Jones said.

The NZ dollar was at 64.55 yen around the local open, and was up to 0.4970 euro from 0.4933 at the local close.

But against the Australian dollar, the kiwi edged lower to A79.49c by 8am. ANZ said an overnight test, and hold, of the aussie against the greenback meant the NZ dollar was unable to move towards the A80c level.

The trade weighted index rose to 65.40 at 8am from 65.00 at 5pm.

- NZPA