The New Zealand dollar held its gains against the Australian dollar, trading near a nine-year high, although some traders said the kiwi is starting to look over-valued against its nearest neighbour and talk of parity may be premature.
The kiwi traded at 95.44 Australian cents as at 5pm in Wellington, having reached 95.72 cents over the weekend, the highest since December 2005. The local currency advanced to 77.57 US cents from 77.51 cents at the New York close on Friday.
The Australian dollar has fallen to its lowest levels since mid-2010 against the greenback on concern Australia is more exposed to commodities that have been hurt by waning demand and over-supply, including crude oil and iron ore. Speculation has increased that the Reserve Bank of Australia is prepared to cut interest rates to underpin that economy, although New Zealand's central bank is also talking down its currency.
"We've got here because of heavy global selling of the Australian dollar and it has hit very key support versus the US dollar," said Alex Hill, head of corporate FX at NZForex. While there is some talk of parity between the kiwi and Australian dollars "inevitably it comes off again because it is over-valued at these levels."
The New Zealand dollar rose to 63.67 euro cents from 63.32 cents on Friday, and gained to 49.84 British pence from 49.72 pence. It rose to 93.42 yen from 92.99 yen. The trade-weighted index was at 78.86.
