The New Zealand dollar touched fresh five-week highs around US69.50c today as currency markets await a decision on interest rates in the United States overnight.
At 5pm the kiwi was at US69.50c, up on last night's close of US69.11c. It ranged between US69.21c and US69.59c during the local session.
The US dollar slipped against most major currencies ahead of a Federal Reserve interest rate meeting.
The US central bank is widely expected to deliver its 10th straight 25 basis point increase in its funds rate -- taking it to 3.5 per cent -- when it issues its post-meeting statement at 1815 GMT (6.15am NZT).
The US dollar's widening rate advantage has helped to boost the currency 9 per cent against the euro and the yen this year. But analysts wonder how long it can keep benefiting, with the market already expecting a rise in the key rate to around 4 per cent or 4.25 per cent this year.
"Although a rate hike by the Fed has been priced in, investors are eyeing the post-meeting statement, trying to get a sense of how high US interest rates will rise," said one trader at a Japanese bank.
Local dealers said the kiwi was attracting yield-driven demand ahead of the rate decision. New Zealand's official interest rate -- 6.75 per cent, the highest in the industrialised world -- has been a leading factor in the kiwi's rise over the past year.
Demand was also fuelled by recent issues of uridashi bonds -- New Zealand dollar denominated bonds that are sold to Japanese investors.
At 5pm in Wellington the euro strengthened to US1.2366 (US1.2331), the US dollar slumped to 111.18 yen (112.40) and the Australian dollar was at US76.52c (US76.44c).
On the crosses, the kiwi rose to 0.5620 against the euro (0.5605), but fell to 38.92 British pence (38.95). It was buying 0.8751 Swiss francs (0.8747) and 77.71 yen (77.71).
On a trade-weighted basis the kiwi was at 69.80 (69.57). The MCI was on 1009 (992).
On the money market, 90-day bank bill yields were steady on 7.04 per cent, July 2009 bond yields were on 5.86 per cent (5.87), and April 2015s on 5.90 per cent (5.91).
- NZPA
<EM>Currency:</EM> Kiwi hits 5-week high against US dollar
AdvertisementAdvertise with NZME.