26 Jul 2011

Dollar breaks through US87 cents

9:24 pm on 26 July 2011

The New Zealand dollar continued to trade above US87 cents on Tuesday - a new post-float high for the currency.

The currency was trading around US87.16 cents at 9pm on Tuesday.

Westpac market analyst Imre Speizer says the kiwi is not the only currency to surge against the US dollar following a live broadcast on the American debt talks by Barack Obama.

In the aftermath of the president's warning of a deep economic crisis if the stalemate over American debt is not resolved, the New Zealand dollar hit US87.08 cents on Tuesday afternoon.

The United States will run out of ability to borrow money and pay its existing bills after 2 August if an agreement is not reached by then to extend the nation's $US14.3 trillion debt limit.

Mr Speizer told Radio New Zealand's Checkpoint programme the US dollar is taking the brunt of market reaction so far - with other currencies such as the euro also strengthening against the Greenback.

He says the markets still believe there will not be a default.

The New Zealand dollar has risen 5% in July, driven by improving economic data and expectations of interest rate rises. The dollar was floated in 1985.