The kiwi dollar, which has had sand kicked in its face for more than two years, flexed its muscles today against the weakening US dollar.
The Federal Reserve's widely anticipated decision to cut US rates for the seventh time this year was the trigger to spur the kiwi up in tandem with the euro and aussie dollar.
The New Zealand dollar zoomed to a six-month high of US44.40c - the same level it first traded as a freely floating currency in March 1985.
It ended at US44.37c, more than half a cent above yesterday's close at US43.73 close.
The kiwi's trade-weighted index rose to its highest level in 13 months, 51.85. However, it is 15 percent below the float level of 61.20 of March 1985.
While the kiwi moved up with the euro, it outperformed most currencies including the euro. Against sterling it was at a year high of 30.55p compared with 30.28p yesterday.
BNZ chief dealer Mike Symonds said the kiwi was poised to strike at US45 cents.
"We are seeing continued demand for the kiwi and given ongoing concerns about where the US economy is heading in successive quarters, people are looking towards New Zealand and saying 'the kiwi looks a reasonably good bet at the moment'."
"Potentially, we may see the kiwi struggle short-term about US44.50c, but we are still targeting the kiwi to achieve US45c sooner rather than later," Mr Symonds said.
He said the key aspect of today's events was not that the Fed cut its rate again, but its commentary about the economy where the emphasis was on downside risk.
The euro closed at US92.62c compared with its US91.27 close here yesterday while the aussie lifted to US53.70c compared with its US53.24c close here yesterday.
The Australasians are expected to benefit from further US dollar weakness.
"The US dollar will continue to correct for at least another couple of months. Investors are clearly showing a bias to try and find an alternative," said Jo Masters, currency strategist at Macquarie Bank.
"It may not go up in a straight line but certainly through this week, I would expect (the aussie) to finish higher than here."
On the crosses the kiwi made gains across the board, ending at A82.55c (A81.90c yesterday's close), 53.15 yen (52.80), 30.55 pence (30.28), 0.9467 marks (0.9372), 0.7350 Swiss francs (0.7272), and 0.4840 euros (0.4791).
The aussie was buying $NZ1.2115 ($NZ1.2118).
The 90 day bills eased sharply in response to the Fed's move, falling to 5.75 percent from 5.83 percent at yesterday's close. With the TWI strengthening, the monetary conditions index tightened to -596 minus from minus 643 and its tightest level for a year.
Bond yields mostly fell with the March 2002s steady at 5.74 percent, the April 2004s fell to 6.27 percent (6.31), the November 2006s to 6.44 percent (6.48), and the November 2011s to 6.60 percent (6.64).
- NZPA
<i>Currency:</i> Dollar muscles to six month high
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