The kiwi dollar jumped nearly half a US cent today after a better than expected December New Zealand trade deficit.
The kiwi had firmed overnight and closed today at US68.75c against yesterday's US68.25c close.
"The data today was better than expected," ANZ Investment Bank chief dealer Murray Hindley said. "It caught the market a little by surprise."
The deficit came in at $292 million against economists' forecasts of $800m.
Mr Hindley said there was good demand out of Asia amid fresh talk of new uridashi bond issues denominated in New Zealand dollars.
Despite the Federal Reserve hiking interest rates again and issuing a relatively hawkish statement, the US dollar lost ground except against the yen.
As expected, the Fed nudged up its key interest rate early by 25 basis points to 4.5 per cent. It marked the end of Alan Greenspan's tenure as chairman of the central bank, and was the 14th 25 basis point rise in the Fed's latest tightening cycle.
As Dr Greenspan passed the Fed chairmanship to Ben Bernanke after 18 years at the helm, central bank policy makers tweaked the post-meeting statement to give Bernanke some leeway but still indicated more rate moves were possible.
The statement solidified expectations that the Fed will lift rates yet again to 4.75 per cent in March after bumping its funds rate to 4.5 per cent on Tuesday, the highest since May 2001, but that further action will depend on the shape of coming economic data.
The Australian dollar firmed to US75.73c from its US75.11c local close yesterday while the kiwi cross held steady at A90.865c.
Yesterday's Reserve Bank (RB) announcement it would raise the surplus cash in the banking system to $500 million from $20 million had no effect on the kiwi's level.
The following are Reuters currency rates:
5pm Tuesday 5pm Wednesday
NZ dlr/US dlr US68.75c US68.25c
NZ dlr/Aust dlr A90.865c A90.90c
NZ dlr/euro 0.56640 0.5642
NZ dlr/yen 80.58 80.30
NZ dlr/stg 38.63 38.58
NZ TWI 70.08 69.83
Australian dollar US75.73 US75.11
Euro/US dollar US1.2148 US1.2201
US dollar/yen 117.21 117.56
- NZPA
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