The New Zealand dollar rose to a four-month high against its Australian counterpart and gained against the greenback after a more upbeat assessment by the Reserve Bank yesterday stoked investors' appetite for the local currency.
The kiwi rose as high as 80.63 Australian cents and traded at 80.48 cents at 8am in Wellington from 80.31 cents yesterday. It climbed to 84.10 US cents from 83.67 cents yesterday.
Reserve Bank governor Graeme Wheeler is set to deliver a speech on improving New Zealand's economy today after holding the official cash rate at 2.5 per cent and pointing at the nation's expected recovery over the coming year.
The statement was interpreted by markets as more hawkish, meaning the bank is unlikely to cut interest rates, and increasing investors' appetite to invest in a stable economy.
"New Zealand is one of the few countries that have quite a positive outlook outside East Asia," said Imre Speizer, market strategist at Westpac Banking. "Outside Asian currencies and the kiwi it's hard to see where you'd want to go to make a risk-on currency trade."
