Currency close: Kiwi treads water

The New Zealand dollar tread water against most major currencies yesterday, but remained at elevated levels after European Central Bank committed to propping up the eurozone at all costs.

The kiwi recently traded at 80.21US cents, up from US80.18c at 8am, while on the Trade Weighted Index of major trading partners' currencies, it was little changed at 72.36 from 72.38.

Growth linked currencies got a shot in the arm overnight after ECB President Mario Draghi hinted that the bank may be considering restarting its euro bond buy programme, a move many investors have been calling for to lower borrowing costs of heavily indebted states like Spain and Italy.

"The market is so short at the moment, especially the euro/dollar, that any good news is seen as a reason to rally," said Alex Hill, a senior currency strategist at HiFX. "It looked like we were due a little topside pressure, but it just keeps everything in the range."

On the crosses, the kiwi recently traded at 76.98 Australian cents, down from A77.10c at 8am, and it was little changed at 62.75 yen from 62.75 yen.

The kiwi was mostly stable versus the single currency, closing the local day at 65.25 euro cents from 65.26 euro cents, and it rose to 51.17 pence from 51.11 pence.

The kiwi may trade between US79.40c and US80.60c, Hill said, with further gains likely on the back of the aussie dollar's strength.