The New Zealand dollar climbed to a month-high versus the greenback ahead of the Federal Reserve's two day policy meeting and after Moody's Investors Services threatened to strip the world's largest economy of its AAA credit rating.
The New Zealand dollar rose to 81.86 US cents at 8am in Wellington, the highest since August 6, from 81 cents at 5pm yesterday. The trade weighted index increased to 72.78 from 72.36.
Rating agency Moody's warned it may cut the US credit rating one notice to Aa1 if the Federal government fails to rein in national debt. Standard & Poor's stripped the world's biggest economy of its AAA-rating in August last year after negotiations to raise its debt ceiling stalled.
That comes as the Federal Open Market Committee meets to review monetary policy in the US, and is tipped to announce a third round of quantitative easing and push out the timeframe for near-zero interest rates to 2015.
"It is fuel to the fire on expectations for further quantitative easing," said Stuart Ive, currency strategist at HiFX. "There is a strong possibility the Fed will do something - we'll see the kiwi go up against the US on that basis."