The New Zealand dollar hung in over US70c today, having recouped some of the ground it lost yesterday.
Earlier this week the kiwi was flirting with US72c for the first time in six months, but by the close of yesterday's session it had sunk to US69.70c -- despite the RB raising the official cash rate by 25 basis points to 7.25 per cent.
The market interpreted Dr Bollard's quarterly Monetary Policy Statement released yesterday as indicating the latest tightening cycle may be coming to an end, which would dampen yield enthusiasm.
Dr Bollard also tried to talk down the kiwi saying it was "exceptionally and unjustifiably high".
But traders said today the 3 per cent slide during the past few sessions was slightly overdone given the kiwi's still-intact yield advantage.
The 7.25 per cent OCR compares with official interest rates of 5.5 per cent in Australia, 4 per cent in the United States and 2.25 per cent in the euro zone.
By 5pm today the kiwi had recovered to US70.26c.
Its dive this week was led by a bleak forecast from global banking heavyweight Goldman Sachs, which predicted a sharp slowdown in the domestic economy next year and advised investors to sell the kiwi.
This was followed by ratings agency Standard & Poor's saying it saw limited upside potential until the country's external trade imbalances are corrected.
The kiwi has also retreated against the aussie in recent days, ending today's local session at A93.58c, almost unchanged from the previous night, but well down on the records hit earlier this week.
Overnight on Monday the kiwi it hit A95.83c, its highest level against the Australian dollar since it floated 20 years ago.
With the interest rate move out of the way, the market's focus is now shifting to the third quarter current account and growth data due out just before Christmas.
Rates:
5pm today 5pm Thursday
NZ dlr/US dlr US70.26 US69.70
NZ dlr/Aust dlr A93.58 A93.60
NZ dlr/euro 0.5949 0.5960
NZ dlr/yen 84.66 84.30
NZ dlr/stg 40.12 40.24
NZ TWI 72.68 72.57
Australian dollar US75.07c US74.57c
Euro/US dollar US1.1810 US1.1716
US dollar/yen 120.48 120.73
<EM>Currency:</EM> Kiwi sticks it out over US70c
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