23 Mar 2015
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NZ dollar rises to new records vs. euro and Aussie

By Pattrick Smellie

The New Zealand dollar rose to a new record against the euro ahead of a key meeting between Greek Prime Minister Alexis Tsipras and German chancellor Angela Merkel, who are at odds over terms of Greece's bailout, and produced a late afternoon burst against the US and Australian dollars.

The kiwi climbed to 70.61 euro cents at 5pm in Wellington, and earlier touched a record 70.73 cents, from beating last week's high of 70.13 cents. The kiwi also surged against the greenback, trading at 76.60 US cents, from 75.65 cents at the New York close, having surged at the end of last week, and reached a post-float high The New Zealand dollar against the Aussie dollar of 97.72 Australian cents.

Tsipras and Merkel are to meet in Berlin on Monday, with the Greek leader having said it would be "impossible" for his country to meet austerity terms demanded by Merkel. Reuters reported she said Greece would only receive fresh funds to ease a cash crunch once its creditors approve a comprehensive list of reforms that it has so far failed to produce. The standoff has heightened talk that Greece could attempt to exit the common currency, driving down a euro already weakened by quantitative easing.

The kiwi's strength "is driven by the euro end," said Raiko Shareef, currency strategist at Bank of New Zealand, which is forecasting the kiwi to reach parity with the euro at the end of June "as the crisis in Greece intensifies."

On the New Zealand-Australian dollar relationship, Shareef said while the cross rate looks stretched on fundamentals, speculation that the Reserve Bank of Australia could cut interest rates again as soon as April "will add fuel to the fire."

The kiwi may trade between 73.50 US cents and 77.25 cents this week, according to a BusinessDesk survey of 11 currency strategists, traders and advisers today. Four expect the kiwi to gain, three say it may decline and four bet it will remain largely unchanged.

Traders will remain focused this week on trying to get more clues on the outlook for US interest rates. While the US Federal Reserve's open market committee last week dropped a reference to being "patient" when it came to lifting rates, Fed Chair Janet Yellen stressed that it did not mean the central bank had become "impatient" to do so and a line-up of Fed officials are scheduled to talk this week, culminating in a Yellen speech on Friday.

The kiwi rose to 91.48 yen from 89.71 yen on Friday. It advanced to 51.07 British pence from 50.31 pence on Friday. The trade-weighted index rose to 79.75 from 78.21 on Friday.

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