KEY POINTS:
The New Zealand dollar remained firmly rooted just below US74c despite comments about the kiwi's level from Finance Minister Michael Cullen.
It closed the local session on US73.79c, little changed from its opening but above its US73.69c close yesterday.
In a pre-budget speech, Dr Cullen said the New Zealand dollar was unlikely to fall significantly until the central bank signalled an end to its monetary tightening policy.
He told a Christchurch manufacturers' group that the export sector was under increasing pressure from the strong currency, which was being driven up by interest rate rises from the Reserve Bank, but there was no quick nor easy solution.
"I don't think we're going to see the dollar come down significantly until, clearly, the Reserve Bank (of NZ) is able to signal that monetary policy has ceased to be tightened," he told Reuters.
Successive economic cycles had seen the NZ dollar move higher for longer and he did not believe that a higher currency was "just a passing phase".
Dr Cullen said there was no pain-free way of cooling robust domestic spending, which was generating inflation, but he was not happy with monetary policy penalising exporters.
A Wellington dealer said Dr Cullen's comments possibly gave the kiwi a little support but it was currently mired in a US73.50c-US74.20c range.
The dealer said the yield differential between New Zealand and Japan would remain massive even if New Zealand eased several times.
The kiwi eased a little against the Australian dollar, ending here on A89.45c from A89.55c yesterday.
Bank of New Zealand currency strategist Danica Hampton said market sentiment towards the NZ dollar against the greenback had become less bullish in recent days.
That was mostly attributable to the recovery of the greenback and to the narrowing of NZ-US interest rate spreads, she said.
At the margin, an onslaught of press articles reporting on job losses in this country and suffering New Zealand businesses may also be helping take the shine off NZ dollar sentiment.
The trade weighted index closed virtually unchanged from its opening at 71.60 from 71.59 yesterday.
The US dollar firmed a shade while the Japanese yen languished near lows after firm US manufacturing data reinforced the view that the dollar's relative yield advantage would remain for now.
The US dollar was supported in part by a report the Federal Reserve was still more concerned about inflation than the risks to economic growth.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US73.79c US73.69c
NZ dlr/Aust dlr A89.45c A89.55c
NZ dlr/euro 0.5424 0.5437
NZ dlr/yen 88.69 88.48
NZ dlr/stg 37.08p 36.96p
NZ TWI 71.60 71.59
Australian dollar US82.49c US82.28c
Euro/US dollar 1.3603 1.3563
US dollar/yen 120.19 120.05
- NZPA