NZ dollar not about to be reined in

The New Zealand dollar broke through fresh post-float highs yesterday, but market participants do not expect the Reserve Bank to intervene just yet, even though current conditions partly meet some of the bank's criteria for taking action.

The kiwi, primed by the National Bank confidence survey, hit a new record high of US82.6c - about half a US cent higher than its previous record set on Monday. The currency has rallied by US11.5c (16 per cent) since mid-March.

Finance Minister Bill English, asked at a news conference if he knew whether the central bank had intervened, said: "No and they wouldn't tell me."

The bank has four set preconditions that must be met before it intervenes.

They are: The exchange rate must be exceptionally high or low; the exchange rate must be unjustified by economic fundamentals; intervention must be consistent with the policy targets agreement; and conditions in markets must be opportune and allow intervention a reasonable chance of success.

BNZ currency strategist Mike Jones said he thought only the first and third conditions were being satisfied. Westpac's Imre Speizer said the trade-weighted index, which measures the currency against those of New Zealand's main trading partners, was the bank's focus and that at yesterday's level of 71.02 the index was still lower than where it was when the central bank last intervened in 2007 and 2008.

BNZ's Jones expected further gains in the kiwi.