The New Zealand dollar was sitting comfortably above US43.50c when the local market closed yesterday.
After opening on a post September 11 high of US43.67c following a buoyant New York session, it traded a narrow range and ended at US43.55c.
"It's still looking okay for maybe another go higher at night," a Wellington dealer said.
The kiwi maintained strength on several of the main cross rates and the trade-weighted index held near its highest level since June 2000. It finished on 52.57, down from its 52.71 opening and high.
The strong currency attracted good importer selling.
The market is awaiting the Reserve Bank's quarterly Monetary Policy Statement today for further direction. Most economists expect Governor Don Brash to deliver a hawkish statement but hold off from raising interest rates until next month or May. But a number of muscular economic indicators over the past fortnight has caused some commentators to change tune and they are bracing for a quarter point rise in the Official Cash Rate.
However, a WestpacTrust dealer said it won't make much difference for the currency because even if Dr Brash does not act immediately, he will certainly signal future rate rises.
"If he goes a quarter, we may see a little bit more upward momentum but the currency has not really been an interest rate play for a while, so I can't see it having a major impact."
He said most countries will be raising interest rates quite soon and if Dr Brash went early, it would have little consequence.
"Everyone is saying its all coming into rosy and fine times so raising rates a little bit early probably won't be perceived as being that bad for the economy."
The Australian dollar finished at US52.40c compared with its US52.55c close Monday.
The yen recouped some of its losses after it had its biggest one-day drop in almost six months against the greenback, as a slide in Tokyo stocks yesterday fuelled concern that recent flows into Japan had started reversing.
On the crosses the kiwi ended at a six-month high against the aussie of A83.09 (A82.92c at Monday's close), 57.12 yen (56.65), 30.51 pence (30.64), 0.7226 Swiss francs (0.7243), and 0.4930 euro (0.4954).
The aussie was at $NZ1.2031 ($NZ1.2063).
The monetary conditions index tightened to minus 580 (minus 583), and 90-day bank bills were at 5.32 per cent (5.33).
On the debt market the April 2004 bonds were at 6.08 per cent (6.03), the November 2006s were at 6.69 per cent (6.67), and the November 2011s were steady at 6.89 per cent.
- NZPA
<i>Currency:</i> Kiwi basks above US43c
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