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NZ dollar vs US dollar -
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The New Zealand dollar surged on Thursday morning after the US Federal Reserve surprised the market by saying it would start buying long term US Treasury bonds.
The Kiwi shot up nearly 1.5 cents from just under $0.53 to a two-month high of $0.5458 (at 9am) - just below its $0.5470 peak recorded on January 19.
Following a two-day policy meeting, the US Federal Reserve said it would buy up to $US300 billion worth of longer-term US government debt over the next six months and expand purchases of mortgage-related debt to help ease credit market conditions.
With benchmark rates virtually at zero, the Fed has turned its focus to pumping money into stressed credit markets in the hope of restarting lending and restoring growth - a policy Fed chief Ben Bernanke has dubbed "credit easing."
The move, which effectively amounts to printing money, saw the US dollar slide
The US dollar weakened across most currencies while the main indexes gained almost 2%, supporting the appetite for riskier assets like the Kiwi.
The Kiwi's gains have also extended across other rates: at 9am the Kiwi was at 0.8045 from 0.7981 against the Australian dollar, and 52.49 agains the Japanese yen from 52.10.
However, the news will not be good for the New Zealand economy in the short term.
"We don't want the currency to strengthen too much given that we want an export-led recovery," says ABN Amro Craigs market analyst Alexandra Dalzell.
The Fed's announcment also saw yeilds on 10-year US Treasury notes record their biggest one day fall since 1987, with longer term 30-year mortgage rates in the US also sliding to record lows.
The Fed left its benchmark interest rate at between 0 and 0.25%.
