High Risk Appetite Boosts New Zealand Dollar

The New Zealand dollar rose today against other most-traded counterparts as the outlook for Greece to receive the rescue package valued as much as €110 billion ($146 billion) improved the investors’ risk sentiment and attracted them to the South Pacific nation’s higher-yielding assets.

The investors are attracted to New Zealand because of its high interest rates, which is 2.5 percent, compared to 0.1 in Japan and about zero in the U.S., but as such trades carry risk that the profits would be erased by the moves at the currency markets, the investors’ risk appetite has to be high enough to encourage them use differences in the interest rates. And the prospect for the Greece to receive the aid soon makes the investors more willing to risk.

NZD/USD traded near 0.7294 as of 11:57 GMT today after it opened at 0.7291. EUR/NZD traded at about 1.8137 after opening at 1.8275.

If you have any questions, comments or opinions regarding the New Zealand Dollar,
feel free to post them using the commentary form below.