KEY POINTS:
The kiwi trod water yesterday as Finance Minister Michael Cullen said the high currency was hurting New Zealand's export industries.
The New Zealand dollar closed at US73.92c after dropping as low as US73.87c and climbing as high as US74.05c.
Bank of New Zealand currency strategist Danica Hampton said the kiwi could hit a post-float high if today's inflation data comes in strong.
Economists expect the consumers price index rose 0.6 per cent in the March quarter, double the Reserve Bank's forecast of 0.3 per cent.
"We think 0.6 per cent will be sufficiently strong to really cement expectations of a hike the following week, so the upwards pressure on interest rates will continue to support the kiwi," said Hampton.
"Given the global backdrop of bearish US dollar sentiment and healthy carry trade appetite, I really can't see any factors that are going to weigh on the kiwi going into the Reserve Bank decision next week."
Hampton said that this week the NZ dollar could climb above US74.57 - its highest level since the currency floated 22 years ago.
Four of 14 economists surveyed by Bloomberg expect the Reserve Bank will lift the official cash rate to 7.75 per cent next week.
Meanwhile, Cullen told a business audience in Westport yesterday that there were "stern challenges from the persisting high dollar".
He pointed to the $14.4 billion current account deficit in the year to March and said, "That tells us, in fairly stark terms, that our growth is still excessively dominated by domestic demand. We are neither saving enough nor exporting enough."
However, Cullen said he saw "considerable underlying strength" in the economy.
Hampton said Cullen's comments had no effect on the kiwi.
