* NZ dollar jumps vs dollar, yen as rates seen near bottom
* Dollar edges up vs yen, off previous day's lows vs euro
* Geithner says dollar to remain world's reserve currency
By Masayuki Kitano
TOKYO, March 26 New Zealand's dollar jumped more
than 1 percent against the U.S. dollar and the yen on Thursday as
investors searching for yield took the view that interest rates
there were at or very near the bottom.
In an otherwise subdued Asian session, the U.S. dollar edged
up against the Japanese currency and held steady against the
euro, recovering from lows hit after U.S. Treasury Secretary
Timothy Geithner said he was open to expanding the use of the
International Monetary Fund's special drawing rights.
The kiwi surged to its highest in more than two months at
$0.5774 NZD=D4 and touched a four-month peak of 56.42 yen
NZDJPY=R as New Zealand government debt yields surged in a sign
investors were reining in expectations for lower rates.
"The New Zealand dollar is rising on the macro view that
interest rates are edging towards the bottom," said Richar order to lock in
at lower rates and leading to a rise in bond yields.
"A lot of guys want to buy the NZ dollar because yields are
rising sharply and there are signs of renewed interest in carry
trades," said Gerrard Katz, head of North Asia currency trading
at Standard Chartered in Hong Kong.
Carry trades involve borrowing in one currency with low
interest rates to buy higher-yielding assets in another and were
a popular play against the yen before the global financial
The New Zealand dollar rose 1.25 percent to $0.5745 and 1.68
percent to 56.16 yen.
The Australian dollar fell 1.1 percent to NZ$1.2161
AUDNZD=, hitting a 10-week low and adding to broad strength in
DOLLAR EDGES UP
The dollar rose 0.2 percent from late U.S. trading on
Wednesday to 97.71 yen JPY=, after dipping to 96.90 yen in the
Geithner said he was open to expanding the use of the IMF's
special drawing rights, comments investors initially interpreted
as an endorsement of China's proposal this week to eventually
replace the dollar as the world's reserve currency with SDRs.
His comments pushed the dollar lower but it then regained
ground after he said the dollar would keep its status as the top
reserve currency for a long time. [ID:nN25425979]
Geithner was probably commenting on China's call for
expanding use of the IMF's SDRs rather than about the notion
that the SDR may eventually replace the dollar as the world's
reserve currency, said Masafumi Yamamoto, head of foreign
exchange strategy Japan at Royal Bank of Scotland.
"The remarks probably were not made from the standpoint of
foreign exchange policy," Yamamoto said, adding Geithner probably
did not mean to auropean bank said the
reasons behind the flows were unclear, although they might be
related to overseas investment by Japanese investors.
With the end of Japan's fiscal year next week, this is a time
when special seasonal flows can appear, he said.
The yen has slid against high-yielding currencies in the
past few weeks as gains in global stock markets have pointed to
an improvement in investors' risk appetite.
Underscoring such sentiment, Asian shares were broadly
higher. The rise in regional shares came after U.S. stocks rose
on Wednesday as unexpectedly strong housing and durable goods
data fuelled hopes the economy is finally on the mend.
(Additional reporting by Charlotte Cooper in Tokyo and Eric
Burroughs in Hong Kong; Editing by Michael Watson)