The kiwi gained against the aussie today as the Reserve Bank of Australia (RBA) held Australia's key interest rate unchanged.
Many economists had been picking the RBA would lift the overnight cash rate by a quarter percentage point to 5.75 percent. But following today's no-change decision, economists are now saying the RBA may not raise rates again this year.
At 5pm today the kiwi was buying A92.74c from A92.29c at 5pm yesterday. The kiwi hit a high of A92.90c during the session, having sat at A92.50c shortly before the RBA decision was made public.
Against the US dollar the aussie was buying U76.63c, from US76.88c at 8.30am today and US76.57c at 5pm yesterday.
BNZ currency strategist Sue Trinh said there had been some market speculation that the RBA's decision to hold steady could put pressure on the Reserve Bank of New Zealand not to move at the end of April.
"But our take is that the RBNZ still has one rate hike tucked up its sleeve," she said.
She said New Zealand faced much higher capacity constraints than Australia.
Meanwhile the kiwi also firmed against the greenback, as the US dollar's recent rally ran out of steam. The kiwi was fetching US71.06c at 5pm today, up from US70.60c at the same time yesterday. The cross ranged between US70.74c and US71.11c during the day.
The perception that the US dollar rally may have gone too far too fast prompted traders to take profits, especially after US Federal Reserve chief Alan Greenspan did not mention an inflation threat when he talked about soaring oil prices late on Tuesday.
At 5pm today, the greenback was buying 108.00 yen (108.59 at 5pm yesterday) while the euro was at $US1.2878 ($US1.2834).
On its other crosses the kiwi was fetching 76.75 yen (76.76), 0.5519 euro (0.5507), 37.76 British pence (37.61), and 0.8550 Swiss francs (0.8551).
The trade-weighted index was at 69.95 (69.64), while the monetary conditions index was at plus 1026 (1003).
On the money markets, 90-day bank bill yields were at 7.11 percent (7.10), July 2009 bonds were at 6.19 percent (6.25) and April 2015s were at 6.07 percent (6.14).
- NZPA
<EM>Currency:</EM> Kiwi gains against Aussie as RBA holds rates
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