KEY POINTS:
The New Zealand dollar eased back from its 22 month high of US72c today.
On a day when Palmerston North manufacturer Click Clack blamed the impending loss of 70 jobs at its Christchurch factory on the high dollar, the relief was only mild.
The kiwi closed on US71.88c from US72.18c yesterday. It eased on profit taking overnight but pressure was also taken off when the Reserve Bank of Australia decided, against expectations, not to hike interest rates.
The Australian dollar eased to US81.23c from US81.53c at the local close yesterday while the kiwi cross rate was unchanged on A88.51c.
Meanwhile, the kiwi topped 85.70 yen today, returning to levels last seen in late February just before the Shanghai sharemarket took a dive and investors grew wary of risk.
The February levels hit by the kiwi had been the best against the Japanese currency since May 2005.
The kiwi came off its session high to end on 85.51 from 85.03 yesterday.
The yen fell across the board on expectations that Japanese investors will resume selling the currency as they park money overseas in the fiscal year just started.
A 1.5 per cent rally in the Nikkei share average kept a lid on yen demand, as the market remained tilted towards riskier strategies such as the carry trade, where low-yielding currencies are used to buy higher-yielding currencies and assets.
"Stock markets have recovered, making investors feel more confident about taking on a bit more risk, so they are selling the yen," said Nobuo Ibaraki, foreign exchange manager at Nomura Trust and Banking.
Bank of New Zealand currency strategist Danica Hampton said the NZ dollar's rise above US72c yesterday was spurred by active buying from a variety of offshore funds and other leverage-type accounts.
Click Clack chief executive John Heng said the New Zealand dollar was "ridiculously over valued".
He slated the Government for failing to give the Reserve Bank tools other than the blunt instrument of interest rates to control monetary conditions.
He also called for the country to drop the kiwi dollar in favour of the US dollar.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US71.88c US72.18c
NZ dlr/Aust dlr A88.51c A88.52c
NZ dlr/euro 0.5390 0.5400
NZ dlr/yen 85.51 85.03
NZ dlr/stg 36.41p 36.49p
NZ TWI 70.26 70.32
Australian dollar US81.23c US81.53c
Euro/US dollar 1.3341 1.3365
US dollar/yen 118.88 117.88
- NZPA