The New Zealand dollar's brief sojourn above US80c yesterday won't be the last as the kiwi hitches its wagon to the surging Australian dollar, leading currency watchers say.
The kiwi rose as high as US80.22c in overseas trade early yesterday, its highest level since July when it reached
a post float high of US81.10c.
The move was on the back of a three-month high in the Australian dollar of US92.37c which followed the release of information from that country's central bank bolstering expectations of further interest rate increases there. The kiwi eased back in local trade yesterday, closing at US79.59c, but ANZ head of markets John Body said a further move up was on the cards.
"You'd have to say it's only a matter of time before we conclusively break US80c and then head up towards US83c.
"It's really going to be spurred on by continued strength in the Australian dollar, especially with the Reserve Bank of Australia throwing a dagger at the market saying they were very close to increasing by 50 basis points this month.
"There's no reason now to suggest we're not going to see the Aussie cash rate go all the way up to 8 per cent and take the aussie pretty close to parity against the US dollar.
"The reality is that if the aussie goes to parity the kiwi's going to be at US85c."
Westpac currency strategist Michael Gordon, who also sees a further move above US80c as a strong possibility, downplayed views that the softening local housing market and drought conditions were poised to trigger a downward move in the local currency. He pointed out that Australia's most recent housing downturn checked growth there only slightly.
