14 Sep 2012

NZ dollar rises on US stimulus move

8:04 pm on 14 September 2012

The New Zealand dollar rose to a six-and-a-half month high after the US Federal Reserve announced further moves to bolster the American economy.

The Fed announced on Thursday it will buy $US40 billion of mortgage-backed debt per month until the outlook for jobs improves substantially.

The New Zealand dollar on Friday jumped about 1 cent from US82.20 cents to US83.20 cents after the announcement.

Westpac market strategist Imre Speizer says it is significant that the Fed put no end date on the quantitative easing, but said it would continue until unemployment drops appreciably.

"In other words they'll keep doing what it takes until the economy improves. Based on their own forecasts for unemployment that improvement probably won't happen for about another three years."

He estimates that could be worth $US1.5 trillion over three years.

Mr Speizer says the Federal Reserve's move combined with last week's European Central Bank announcement that it would buy the bonds of European nations last week should support the New Zealand dollar for some time.