Exporters, risk appetite behind kiwi recovery

February 10 - Currency open

The New Zealand dollar improved against the greenback overnight, driven by exporters and a slight increase in risk appetite.

At 8am today the kiwi was worth US69.44c, up nearly a cent from US68.54c at 5pm yesterday.

Overnight it peaked at US69.66c as it drove upwards from yesterday's low of US68.15c.

The kiwi experience a deeper dip than expected yesterday as some felt the announced tax proposals would see an exodus, said ANZ economist Mark Smith.

The reality was that it provided further opportunities for exporters to take cover and it delivered an appropriate spike overnight.

Support from a stronger euro in early New Zealand trading should now see an extension of the kiwi back towards the US69.85c and markets would continue to digest the tax proposals, he said.

Against the Australian the kiwi slipped to a new level of A79.11c this morning, after reaching as high as A79.53c yesterday.

The NZ dollar gained slightly against the euro to 0.5038 from 0.5009 yesterday.

Against the Japanese yen the kiwi improved to 62.27 from 61.28 and it was also up against the British pound, to 44.23p from 43.93p yesterday.

The trade weighted index rose to 64.27 from 63.74 yesterday.

Meanwhile, in overseas exchanges, the euro rose against the US dollar on Tuesday, on track for its best one-day gain since November, after reports of a possible European bailout for debt-strapped Greece.

In midday New York trading, the euro was up 1 percent on the day at $1.3789, on track for its best daily percentage rise since November.

The euro has fallen 9 percent from a 15-month high of $1.5145 reached in late November over fears about fiscal problems in Greece, Portugal and Spain.

The euro was firmer versus the yen, with gains of about 1.3 percent at 123.53 yen. It fell to its lowest level in nearly a year on Friday as sentiment on the euro zone currency deteriorated further. It picked up some lost ground on Monday.

A slight increase in risk appetite also fueled some reduction in yen longs established during last week's bout of risk reduction, with the dollar rising 0.3 percent to 89.53 yen.

The dollar held a softer tone versus a basket of currencies, however, trading down 0.7 percent at 79.748.

- NZPA