NZ dollar gains strength

An in-demand New Zealand dollar continued to strengthen overnight after the boost it received yesterday when softer-than-expected words from Australia's central bank put the timing of the next rate rise across the Tasman in doubt.

The kiwi also had a little extra help around 7.15am when the Federal Reserve kept United States interest rates unchanged and reiterated a pledge to keep rates "exceptionally low" for an "extended period".

The Fed has targeted an overnight bank-to-bank lending rate of between zero and 0.25 percent since December 2008. Interest rates near zero percent diminish the appeal of the US dollar against higher-yielding currencies.

By 8am the NZ dollar was buying US70.90c, up from US70.44c at 5pm yesterday.

Demand locally and offshore during the past 24 hours, specifically against the Australian dollar, meant a steady rise for the NZ dollar, ANZ bank said in its morning briefing notes.

The reluctant exit by many of short NZ dollar/long aussie positions ensured a spike higher overnight in that cross, ANZ said.

The kiwi was at A77.29c by the local open from A76.97c at 5pm, having reached a two-week high above A77.40c early today.

The NZ dollar is struggling away from its lowest level in more than nine years against the aussie - around A76.10c - on March 5.

The NZ dollar was little changed against the European currency, edging up to 0.5154 euro at 8am from 0.5144 at the local close.

An apparent solution, or at least solid backstop, to the current Greece issue had seen the euro return to favour, ANZ said.

The kiwi was up to 63.99 yen at 8am from 63.47 at 5pm, while the trade weighted index was up to 65.23 from 64.96.

- NZPA