Continued demand from Asia helped the kiwi dollar claw back most of the ground it lost today following a widely expected US interest rate hike.
The kiwi closed on its session high at US69.43c, compared with a near-five week high of 69.50c at yesterday's close. Dealers expected it to test US60.50/60c levels overnight.
"It's certainly difficult to be fighting the kiwi strength at the moment," BNZ currency strategist Sue Trinh said.
She said the kiwi continued to enjoy the favour of Asian buyers after a "monster" uredashi offer on kiwi bonds from Japan retail investors.
"It was light selling early on in the piece but that gave way from mid-afternoon onwards to a bit of a rush of buying from local players. "
In contrast, the greenback dipped after the US Federal Reserve failed to deliver a stiffer warning about combatting inflationary pressures.
The Fed still raised benchmark rates 25 basis points to 3.50 per cent. The US rate is tipped to reach at least 4 per cent by year's end, but remains less attractive than New Zealand's 6.75 per cent.
The New Zealand dollar was also strong against the aussie following Monday's move by the Reserve Bank of Australia from a hawkish outlook to a more neutral one.
At the close the kiwi rose to A91.00c (A90.84c), a level not seen since mid-July, on Australia concerns about their narrowing interest rate premium over the US.
Miss Trinh said A91.50c was now on most dealers' radar.
At 5pm the euro was trading at US1.2360 (1.2366), the US dollar was 111.24 yen (111.18 yen) and the aussie was down at US76.27c (US76.52c).
On the crosses, the kiwi dipped slightly to 0.5618 against the euro (0.5620), and to 38.83 British pence (38.92). It was buying 0.8749 Swiss francs (0.8751) and 77.20 yen (77.71).
On a trade-weighted basis the kiwi was at 69.70 (69.80). The MCI was on 1001 (1009).
On the money market, 90-day bank bill yields were steady on 7.04 per cent, July 2009 bond yields were on 5.82 per cent (5.86), and April 2015s on 5.86 per cent (5.90).
- NZPA
<EM>Currency:</EM> Kiwi bounces back after US Fed hike
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