The New Zealand dollar closed on its lows today, but its recent stellar run has caught the eye of influential trading house Goldman Sachs.
The United States brokerage devoted its weekly foreign exchange "view point" column to the kiwi, which in the last few days has taken out new highs and has been the strongest of the US dollar-crosses the firm monitors.
"We are forecasting continued appreciation through the year," Goldman analyst Dominic Wilson said.
"Our Objective Currency Index score for the New Zealand dollar/US dollar cross remains very positive. At 4.4, the score is easily the highest of all the crosses we examine."
The index gives each cross rate a score between -10 and +10, with negative values being bearish and positive values bullish.
The New Zealand dollar opened strongly this morning to continue its charge above US55 cents, a level it breached yesterday for the first time since May 1999. At 9am it traded at US55.37c, but by 5pm the unit ran out of steam, easing to US54.90c.
Its Australian counterpart closed at US58.90c (US59.07c).
On the Australian/kiwi cross the local unit eased to A93.25c from A93.62c at 9am - a fresh seven-year high.
A holiday in the United States on Monday meant offshore trading was quieter than normal.
Goldman Sachs said the major factor driving the kiwi's recent spurt was a large shift in New Zealand's migration patterns. Over the last 12 months inward migration has reached its highest levels ever, boosting the population by about 1 per cent - a sharp turnaround from the exodus of 1999 and 2000.
This has prompted a housing boom, boosted the economy and supported the currency.
"We think it will be more important than ever to focus on the monthly immigration numbers for clues to the currency's performance and hints on how long to stay on the Kiwi Express," Goldman's Mr Wilson said.
Mr Wilson said the firm will monitor the migration numbers over the coming months for signs "this engine may be starting to slow or for confirmation that New Zealand's people power is still turbo-charging the currency".
December migration data is due out on February 4.
The kiwi has gained a massive 32 per cent since the start of last year and over 5 per cent in the 13 trading days of this year.
The trade-weighted index, which measures the kiwi against the currencies of New Zealand's five main trading partners, sprinted to 61.04 this morning - its highest level since March 1998 - before closing at 60.70 (60.77 late yesterday).
Against its other main trading partners at 5pm the kiwi was buying 0.5154 euro (0.5170 at yesterday's close), 65.20 yen (65.07), 34.18 pence (34.19), and 0.7529 Swiss francs (0.7558).
The Australian dollar was at $NZ1.0724 ($NZ1.0727).
The 90 day bank bills were at 5.84 per cent (5.86), and the monetary conditions index was at plus 189 (plus 197).
Long-dated bonds rallied, with the April 2004s at 5.59 per cent (5.64), the November 2006s at 5.74 per cent (5.83), the November 2011s at 6.02 per cent (6.14), and the April 2013s at 6.05 per cent (6.17).
- NZPA
<i>Currency:</i> Kiwi closes on its lows but catches Goldman's eye
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