After a strong start the kiwi softened throughout today's local session, dipping back below US74c.
At 5pm in Wellington the kiwi was buying US73.93, from an early session high of US74.15c and from US73.88c at 5pm yesterday.
BNZ currency strategist Sue Trinh said the pressure on the top side came from the softening euro.
"There was a fair bit of euro selling against the yen as well, but with the euro unable to really gain traction the kiwi followed suit in sympathy," she said.
The greenback was firm after US Treasury data indicated foreign investment in US assets in January amply offset the country's gaping trade deficit.
Ms Trinh said US current account figures due out tonight, could spell trouble for the greenback given the focus on the size of the US deficit.
On the domestic front, there was little reaction to Reserve Bank governor Alan Bollard's testimony to parliament's finance and expenditure committee today. Mr Bollard was questioned on his decision last week to lift the official cash rate to 6.75 per cent from 6.5 per cent, which put more upward upward pressure on the currency.
He declined to comment on several questions on whether or not the bank should intervene in the currency market to reduce the dollar's value.
Asked after the meeting if the New Zealand dollar was over-valued or justified at its current level by the commodity prices, he said: "If you look historically at the relationship, you can see that when commodity prices are very high, the New Zealand dollar is very high and it is maintaining that relationship."
Elsewhere at 5pm, the euro was buying US$1.3299 ($1.3365 at 5pm yesterday), while the greenback was at 104.47 yen (104.71) and the aussie was trading at US78.90c (US78.89c).
On the crosses the kiwi was at A93.69c (A93.65c), 0.5559 euro (0.5528), 38.65 British pence (38.57), 77.24 yen (77.37), and 0.8620 Swiss francs (0.8568).
The trade-weighted index was at 71.28 (71.17), and the monetary conditions index was at plus 1115 (1109).
On the money markets, 90-day bank bill yields were at 7.06 per cent (7.08), July 2009 bonds were unchanged at 6.32 per cent and April 2015s were unchanged at 6.18 per cent.
- NZPA
<EM>Currency:</EM> Kiwi bobs back below US74c
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