Deutsche Bank has abandoned its negative view on the New Zealand dollar, picking a rise to 45USc before March.
The kiwi hit a three-month high overnight on Thursday of 43.08USc, continuing its 10 per cent appreciation over the past fortnight and pulling further away from its October all-time low of 38.95USc.
Deutsche Bank said historical, cyclical, technical and market forces appeared to be swinging in favour of the Australian and New Zealand dollars.
Locally, factors included accelerating domestic growth through 2001 while growth elsewhere slowed; a likely 50 per cent reduction in the current account deficit as a percentage of gross domestic product; and an improving relationship between business and the Government.
The bank was "seriously contemplating" gains of at least 5 per cent in the Australasian currencies against the US dollar in the New Year.
"We acknowledge that there are risks to our view that further sustained gains are a likely prospect ... but our analysis recommends that a 'buy dips' rather than 'sell rallies' approach is now the best way to approach these currencies," the bank said.
Over the next three months, the bank expects to see the kiwi reach 45USc and the aussie 57USc. They closed locally at 42.56USc and 54.55USc, respectively.
Deutsche Bank was retreating from its former view that the kiwi and aussie would be punished more than most by the slowdown in the global, and in particular Asian, economies.
The bank said the Australasian dollars did not traditionally weaken when their current accounts were improving.
And oil prices appeared to have peaked.
The price of benchmark Brent Crude has dropped 20 per cent since November 15, to $US27.24c a barrel from $34.03c.
"In Australia the rise in oil this year probably reduced retail sales growth by something in the ball park of 2 percentage points, while in New Zealand the effect is likely to have been greater than 1 percentage point."
- NZPA
Deutsche Bank backs kiwi
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