KEY POINTS:
After hitting a record yesterday, the NZ dollar fell sharply against the greenback overnight but then regained much of the lost ground.
Around 8am the NZ dollar was little changed against a range of currencies from levels at the 5pm local close yesterday.
It was buying around US74.70c, having hit US74.93c yesterday, according to Reuters figures.
The peak yesterday was the NZ dollar's highest level against the greenback since being floated in March 1985, and was in fact the highest level in quarter of a century.
The kiwi has gained 10 per cent since the Reserve Bank raised interest rates to 7.5 per cent on March 8, the highest in the industrialised world, lifted by expectations of further monetary policy tightening and strength in the Australian dollar
Yesterday's push was sparked by data which provided a nasty surprise about the level of domestic inflation, leading to increasing speculation that the Reserve Bank will hike interest rates again next week.
The kiwi regained US74.90c briefly yesterday evening but later fell away sharply towards US73.80c by about 12.30am, before strengthening again.
The ANZ bank said a corrective move overnight for Australasian currencies came as carry trade players took another round of profits, cleaning out weak long positions. Further buying interests had then arrived.
It did not expect the NZ dollar to hit new highs today, saying consolidation could be expected heading into the Reserve Bank's interest rate decision next week.
Extensions beyond US75c would be hard fought, and require further weakness in the greenback, and expectations of further rate hikes from the Reserve Bank.
The US currency was also weak elsewhere overnight, dropping to a 26-year low against sterling and trading near a record low versus the euro, as expectations for US interest rate cuts contrasted with prospects for monetary tightening in Europe and Asia.
The greenback later turned slightly higher against the pound, trimmed early losses against the euro and fell against the yen.
The greenback also held near Tuesday's 17-year low against the Australian dollar.
The NZ dollar opened today little changed from yesterday evening against other currencies.
It was buying A89.24c around 8am from A89.31c at 5pm yesterday, 0.5497 euro from 0.5504, and 88.69 yen from 88.67. The trade weighted index was at 72.13, the same level as yesterday evening.
- NZPA
