The kiwi consolidated today to close under US63c after a strong run yesterday following a rate increase by the Reserve Bank of New Zealand (RBNZ) .
At 5pm today the kiwi was at US62.95c (from US62.47c at 5pm yesterday), having traded as high as US63.40c earlier in the day.
The kiwi's closing price was still more than US1c higher than where it started yesterday, when it was fetching US61.69c.
The kiwi reacted well to yesterday's announcement from RBNZ governor Alan Bollard that he was lifting the Official Cash Rate (OCR) to 5.75 per cent from 5.5 per cent.
Although the increase was expected, Dr Bollard surprised the market by signalling there would be two further rate hikes this year and that inflation could push through the 3 per cent mark.
The kiwi's most significant gain since the announcement has been against the aussie dollar.
BNZ currency strategist Sue Trinh said kiwi/aussie buying has become an ongoing theme in the market.
She said this trend was likely to continue over the next few weeks, on the back of the hawkish RBNZ statement contrasted against inaction from the Reserve Bank of Australia.
At 5pm today the kiwi was buying A90.78c, from A90.62c at 5pm last night and A89.38c at 8.30am yesterday.
Ms Trinh said the kiwi could push up to A94c to A95c over the next three to six months.
The market is likely to be quiet overnight, with the US on holiday for former president Ronald Reagan's funeral.
At 5pm the US dollar was trading at 110.00 yen (109.71), and the euro was buying US$1.2013 (US$1.2053).
Meanwhile the aussie was buying US69.30c (US68.95c)
On the crosses, the kiwi was buying 0.5231 euros (0.5718), 34.30 British pence (34.16), 69.4 yen (68.55), 0.7893 Swiss francs (0.7836).
The trade-weighted index was at 64.40 (63.89), while the monetary conditions index was at plus 508 (467).
On the money market, 90-day bank bill yields were at 6.07 per cent (6.05) February 2006 bonds were at 6.02 per cent (6.00), July 2009s were at 6.23 per cent (6.21) and April 2013s were at 6.38 per cent (6.36).
- NZPA
<i>Currency:</i> Kiwi consolidates to end day under US63C
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