The New Zealand dollar rallied today after key inflation data cemented the market view that interest rates will rise again next week.
Annual inflation touched 3.4 percent in the year to September, Statistics New Zealand said today -- its first breach of the Reserve Bank's (RB) 1-3 percent target since 2001.
That saw the kiwi touch a high of US69.94c before closing at US69.88c, compared with US69.35c last Friday.
Fourteen out of 15 economists polled by Reuters now expect a 25 basis point rate rise to 7 percent when the central bank meets on October 27. Of those economists, nine expect rates to stay at 7 percent until at least June 2006.
The kiwi was also underpinned by housing data out today showing that while the national median stalled at $290,000 in September, demand was solid, with sales up 7.6 percent over the month.
RB governor Alan Bollard last week included the buoyant housing market among a list of factors causing imbalance in the economy. His hawkish speech was seen as underpinning a rate hike.
New Zealand's 6.75 percent official cash rate -- the highest in the industrialised world -- has played a big part in the kiwi's strength in the past year.
Today's data saw the kiwi rally across the board.
The following are Reuters currency rates:
NZ dlr US69.88c US69.35c
NZ dlr/Aust dlr A92.64c A92.46c
NZ dlr/euro 0.5777 0.5775
NZ dlr/yen 79.58 79.60
NZ dlr/stg 39.46p 39.60p
NZ TWI 71.01 70.92
Australian dollar US75.44c US74.98c
Euro/US dollar US1.2108 US1.2045
US dollar/yen 113.89 114.42
- NZPA
<EM>Currency:</EM> CPI cements rate hike, underpins kiwi
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