3 Dec 2011

Prediction NZ dollar may climb to 80 US cents

11:30 am on 3 December 2011

A currency analyst says the New Zealand dollar could climb back to 80 US cents in coming days, as political heavyweights try to shore up solutions for the eurozone crisis.

Even eurozone leaders are warning the bloc is entering a decisive phase in its bid to resolve the debt crisis ahead of next week's European Union summit, when financial markets are expected to punish inaction.

The EU's monetary affairs commissioner Olli Rehn says the eurozone is entering a critical period and the crisis response needs work.

"We have to continue work especially on two fronts, both in order to ensure that we have sufficiently credible financial firewalls to contain market turbulence and at the same time we need to further enforce our economic governance," he says.

The Kiwi has climbed 2c against its US counterpart in the last 24 hours, after six central banks agreed to make it cheaper for banks to buy US dollars, which they hope will ultimately help businesses and households access finance more easily.

Westpac markets strategist Imre Speizer says additional responses in the next week or so could lift the dollar even further.

He says there are central bank meetings in Europe next week where interest rates might be cut, which would be a boost to global confidence.

The Australian and New Zealand central banks are also due to meet.

Mr Speizer says the Kiwi could possibly rise to 79 or even 80 cents in the next few days.

However, he says the longer-term outlook is still negative and it could go down to 70 or 71.