KEY POINTS:
The New Zealand dollar drifted off its early highs today as it followed the Australian dollar lower.
By 5pm, the kiwi was at US61.78c from US61.20c late yesterday afternoon.
The currency had hit a peak around US62.60c overnight as it responded to strong surges on offshore equity markets off recent lows.
Against the Aussie, the kiwi was at A88.55c from A87.89c late yesterday afternoon. It had also strengthened against the euro, sterling and yen.
The market continued to price in an interest rate cut of around 1 percentage point on Thursday when the Reserve Bank of NZ releases its decision on the Official Cash Rate.
That was despite a rise in annual consumers price inflation to an 18-year high of 5.1 per cent in the year ended September, on the back of a quarterly inflation rate of 1.5 per cent.
"The market is expecting 100 points, and there is talk of an even bigger cut," one dealer said.
The annual inflation rate was well above the Reserve Bank's target of 1-3 per cent over the medium term, but in line with economists' expectations.
The interest rate cuts were expected to help boost the economy amid a rapid deterioration in the global economy and markets.
The US dollar was boosted by Federal Reserve Chairman Ben Bernanke's testimony before Congress endorsing more government spending to stimulate the US economy, despite the enormous US budget deficit.
Tight credit conditions and slumping stock markets have fostered demand for the US dollar as a safe-haven currency, along with the yen.
Currency rates:
NZ dlr/US dlr US61.78c US61.20c
NZ dlr/Aust dlr A88.55c A87.89c
NZ dlr/euro 0.4632 0.4548
NZ dlr/yen 62.85 62.27
NZ dlr/stg 35.93p 35.27p
NZ TWI 61.24 60.52
Australian dollar US69.75c US69.61c
Euro/US dollar 1.3330 1.3458
US dollar/yen 101.76 101.72
- NZPA
