KEY POINTS:
The New Zealand dollar fell back later in the day after topping US74c for the first time in two years today.
By 5pm, the kiwi was at US73.90c but remains headed for a possible post-float high, with economists predicting even higher levels ahead.
The kiwi crossed through the US74c level shortly after 10am today and by 10.30am was around US74.10c, a cent higher than its level of Friday morning.
The last time the NZ currency was this high against its US counterpart was in March 2005, 20 years after the kiwi was floated in March 1985.
That time it got to US74.63c, its highest level in 23 years.
The NZ dollar has also performed strongly against the Japanese yen, hitting its highest point against the Japanese currency since 1990, and around 10.30am was above 88.60 yen to the kiwi.
On Friday the kiwi was boosted by stronger than expected retail sales data, and since has received further backing from a communique released after a meeting of the Group of Seven countries.
The G7 meeting did not warn against carry trades -- where investors borrow low interest currencies such as the yen, then put those funds into higher yielding but possibly riskier investments, such as the NZ dollar -- as some investors had worried.
BNZ senior economist Tony Alexander said investors and overseas buyers are currently seeing very little reason for selling the New Zealand dollar. He said closer to home, consumers can also expect to reap the benefits with lower costs for overseas travel and imported goods.
Tony Alexander is predicting the dollar will continue to perform strongly for the next couple of years.
The Australian dollar also marched higher over the weekend to open the week above 83 US cents.
The dollar held above the US$0.8300 mark for the entire weekend session, trading between a low of 0.8313 and a high of 0.8339 - its highest level since October 10, 1990, when it reached 0.8345.
Bank of New Zealand currency strategist Danica Hampton said comments from Friday's Group of Seven (G7) meeting of finance ministers in Washington helped the already well-supported Australian dollar.
The G7 ministers from Britain, Canada, France, Germany, Italy, Japan and the United States released a statement on their discussions on Saturday.
"They took quite a soft line on the yen, and that sort of gave the green light for carry trades," Ms Hampton said.
"So we saw a bit of yen weakness this morning in a globally supported backdrop for carry trades."
Ms Hampton said the Australian dollar will remain well supported today.
However, she said options-related selling ahead of the US$0.8350 level would likely slow the ascent.
"But I think undeniably the direction for the Aussie this week will be higher," she said.
- NZPA, NEWSTALK ZB
