Dollar’s plunge tipped to reach 60USc by year end

The kiwi dollar looks to have peaked and could fall to its "fair value" of 60USc by the end of the year, ANZ National Bank economists say.

The dollar hit a 20-year high of 74.5USc on March 10 after Reserve Bank Governor Alan Bollard raised the official cash rate.

Last week it fell out of favour as the market digested news of a gaping balance of payments deficit and weak growth in the December quarter.

That coincided with renewed buying interest in the US dollar following a statement by the Federal Reserve hinting that the rising interest rate trend had a lot further to run.

The kiwi, which was around 74USc before the announcement, was trading below 71USc yesterday.

"People have been ... seeking higher yields elsewhere, but if you can park investment in US treasuries and get 5.5 per cent instead of 4 per cent, that seems much more worthwhile," ANZ National chief economist John McDermott said.

The kiwi has also weakened against the Australian dollar, the euro and the yen.