NZ dollar treads water

The New Zealand dollar made up a little of the ground lost overnight, undoing some of the effect of a warning from China that the global economy remained vulnerable to sovereign debt risks.

By 5pm, the kiwi was at US67.80c, down from its level late yesterday afternoon of US68.26c but only a touch below its level this morning of US67.96c.

Against the Australian dollar, the kiwi had risen to A80.81c from yesterday's A80.40c.

The Reserve Bank of Australia (RBA) left its cash rate at 4.5 percent this afternoon, as expected, amid concerns about the high levels of debt in Europe which have depressed the Australian dollar and hurt some commodity prices.

The Australian dollar has been in a steady decline against the US dollar since mid-April, pushing the New Zealand dollar higher on the cross-rate. The kiwi hit a seven-month high against the Australian dollar of A82.38c just over a week ago.

The RBA decision followed a decline in approvals for building new houses, which also weighed on the Australian dollar.

The kiwi was down against the euro, sterling and yen, and fell on a trade-weighted basis to 65.99 from 66.27 late yesterday afternoon.

The euro neared a four-year low against the US dollar on fears that Europe's debt problems could flow on to the banking system.

In this country, the odds of the Reserve Bank lifting interest rates next week rose, providing modest support to the New Zealand dollar, in the wake of yesterday's May survey of business from the National Bank.