KEY POINTS:
The kiwi dollar hit a fresh post-float high above US79c yesterday - and currency strategists and economists say there is nothing to stand in its way of going higher still.
In overnight trade the kiwi climbed as high as US79.41c, its highest level since it floated in March 1985.
Currency market sources say the Reserve Bank has not intervened in the currency market for the past couple of weeks, after at least three attempts to cap the New Zealand dollar's rise by selling the currency last month failed to have any discernible effects.
The central bank generally does not confirm whether or not it has intervened.
The kiwi made its gains after Monday's stronger-than-expected inflation data, which pointed to another Reserve Bank interest rate rise to 8.25 per cent next week. Also, ongoing fallout from the collapse of the sub-prime mortgage market in the US has seen the US dollar continue to fall.
"The US dollar looks like the ugly duckling and the kiwi still looks pretty attractive when you look at yield," said ANZ chief economist Cameron Bagrie.
He expected the kiwi to keep climbing as high as US80c or US82c and not to fall until either the US dollar started rising or data showed "very clear evidence" of a slowing New Zealand economy.
"Neither of these is on the horizon at the moment so it looks like the market is going to continue to slow grind up the stairs," he said.
Deutsche Bank currency strategist John Horner said most of the kiwi's gains over the past couple of weeks had been against the US dollar, with other high-yielding currencies such as the Australian dollar and sterling also rising.
Westpac also expects the kiwi to keep climbing, due to strong dairy prices, solid world growth and foreign investors continuing to ignore New Zealand's current account deficit and focus instead on yield.
At the local close yesterday, the kiwi was at US79.20c.
