KEY POINTS:
Exporters were given another whack today when the New Zealand dollar shot above US78c in hectic trading after the Reserve Bank of Australia hiked interest rates.
The kiwi raced to a three-week high US78.27c against the greenback as the US dollar fell to all-time lows against the euro and a basket of major currencies.
By 11.40am the kiwi was buying US78.20c after opening at US77.61c. It had moved fairly steadily upwards from around US76.40c ahead of the RBA announcement to hike rates by a quarter of a percentage point to 6.75 per cent.
It is the sixth increase since the 2004 election. Australia holds a general election on November 24.
The decision - following the central bank's monthly board meeting yesterday - comes in the wake of last month's strong inflation figures and a series of other indicators suggesting price pressures are becoming overheated.
Economists expect the central bank could raise rates even further given the strength of the economy, possibly as early as December.
Against the Australian dollar, which rose to US93c against the greenback from US92.60c, the kiwi rose to A84.10c from A83.80c at 7.30am and from A83.65c at 5pm yesterday.
- NZPA