By ELLEN READ
The two Alans - Greenspan and Bollard - sent the kiwi dollar on a wild ride with a hectic day's trading seeing it see-saw several times yesterday before ending the session lower at 67.58USc.
First, a change in tone from the US Federal Reserve when announcing its decision to leave US interest rates at 1 per cent boosted the greenback - which meant the kiwi tumbled sharply from 67.95USc to 67.34USc.
The Fed's 8.15am statement unexpectedly dropped a commitment to hold interest rates low "for a considerable period," saying instead that it would be "patient".
Analysts took this to mean that higher US rates were closer than previously indicated. The kiwi's dip was shortlived as 45 minutes later it soared back up on the unexpected RBNZ rates hike before falling again after 10.15am on worse than expected trade numbers.
Finance Minister Michael Cullen's comments in a speech to a pipfruit conference exacerbated the fall.
He said the means by which governments could influence currency were limited and carried significant risks but that "a stance which renounces in advance any possibility of intervention in any circumstances is also a risky one".
Westpac senior currency strategist Johnathan Bayley said Cullen's remarks were "nothing startling".
"Kiwi/US was already on the way down and that just encourage it to push down a bit further," Bayley said.
In the afternoon, the kiwi rose again on the back of a rally in the euro and Australian dollar.
Overall, the kiwi started the day around 67.9USc and was at 67.58USc by 5pm - 20 basis points lower than Wednesday's 5pm level of 67.78USc.
"The biggest driver was the Fed, the knee-jerk reaction to the wording change there," Bayley said.
The kiwi gained ground against the Aussie dollar yesterday, rising over half a cent to end the day at 87.6Ac. The cash rate's move up to 5.25 per cent means local rates now match Aussie ones and could go higher.
That shift in relative expectations - softening in Australia and firming here - means the kiwi should continue to outperform the aussie as investors chase higher yields.
Fed sends kiwi on wild ride
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