Dollar firm after last night's high

The New Zealand dollar held near highs it reached in offshore trading on Tuesday night today with the help of a weak US dollar.

The NZ dollar was US73.40c at 5pm from US73.24c at 8am and US73.35c at 5pm yesterday. It rose to US73.80c on Tuesday night, its highest since July 2008.

It also reached highest level in 25 years against the sterling and a 16-month high against the euro last night, after Australia hiked its official interest rate to 3.25 per cent from 3 per cent at 4.30pm (NZ time) yesterday.

Dealers said the NZ dollar was riding somewhat on the coat tails of the Australian dollar as investors view economies here as having a different outlook to the US.

"I think it is just a continuation of a de-coupling against the US dollar. This part of the world is doing OK," ANZ chief foreign exchange dealer Murray Hindley said.

"With Australia moving on rates, the likelihood is that other parts of this world may also move on rates."

Also supportive were strong equity markets in Asia and another solid result from Fonterra's latest online auction, with the average price of whole milkpowder rising 5.7 per cent to be more than 60 per cent above July lows.

Mr Hindley said there was a lot of liquidation of positions on the aussie/kiwi cross that pushed the cross to A83.80c ahead of the Australian decision.

The rate then fell to A82.99c at 5pm yesterday and was A82.54c at 5pm today.

The NZ dollar was buying 0.4991 euro at 5pm today after last night edging above 0.5 euro for the first time in 16 months.

It was 65.17 yen at 5pm from 65.29 yen yesterday and was at 46.16p after rising 46.32p on Tuesday night.

The trade weighted index was 66.42 at 5pm from 66.45 at the same time yesterday.

- NZPA