The New Zealand dollar jumped over a cent against the greenback after the United States Federal Reserve unveiled more measures to revive the US economy.
The kiwi surged to a two-month high around US54.60c after the announcement this morning, as analysts feared the Fed's move to buy US$300 billion ($575.8billion) of long-dated Treasuries over the next six months would flood the market with US dollars and increase already large US deficits.
Other currencies also surged against the US dollar.
The kiwi lost some of its gains during domestic trading hours to be trading at US54.16c at 5pm, compared with US53.01c at 5pm on Wednesday.
The Fed also said it would extend mortgage-related debt purchases to help ease credit market conditions.
BNZ Capital said in a market report today that if the kiwi's appreciation persisted it would be problematic for the Reserve Bank, "which undoubtedly views a lower local currency as a valuable source of stimulus for the New Zealand economy".
At 5pm the kiwi was buying 0.4025 euro compared with 0.4064 24 hours earlier, and also lost ground against the Japanese currency to 51.99 yen from 52.19.
Against the Australian dollar the kiwi was buying A80.17c at 5pm from A80.37c the day before, but on the trade weighted index it rose to 54.17 from 53.95.
