The greenback played second fiddle on the local currency market today as the New Zealand dollar shot to an eight-year high against the Japanese yen.
The kiwi touched 79.14 against the yen in intraday trading -- its highest since November 1997 -- as rumours of a large uridashi issue swirled. It closed at 78.97.
Uridashis are New Zealand dollar denominated bonds bought by Japanese investors, hungry to take advantage of New Zealand's high interest rates.
"We've seen significant demand out of Tokyo in particular," Bank of New Zealand currency strategist Sue Trinh said.
"This ongoing yield appetite is keeping the kiwi very well bid at the moment and helping to keep the kiwi underpinned in an environment that is very US dollar positive."
Against the US dollar the kiwi closed on its highs around US69.24c, compared with US68.96c late yesterday.
With no major local data due this week the market is looking to inflation figures due on October 17 for direction.
They could provide further ammunition for the Reserve Bank to hike official interest rates at its next review on October 27.
The market is split over prospects for next central bank move with a Reuters poll showing five of 14 forecasters expecting a rise in rates to 7.00 percent, with one other reviewing their forecast.
The following are Reuters currency rates:
NZ dlr US69.24c US68.96c
NZ dlr/Aust dlr A90.79c A90.79c
NZ dlr/euro 0.5805 0.5775
NZ dlr/yen 78.97 78.69
NZ dlr/stg 39.42p 39.27p
NZ TWI 70.55 70.30
Australian dollar US76.28c US75.97c
Euro/US dollar US1.1928 US1.1947
US dollar/yen 114.06 114.09
- NZPA
<EM>Currency:</EM> Kiwi soars to eight year high vs yen
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