The New Zealand dollar has been a star performer since breaching the significant US48c level yesterday.
By 5pm the kiwi traded at US48.35c after touching a three month high of US48.47c overnight, and rising against its US48.10c close yesterday
The aussie was at US54.95c, up slightly against yesterday's close of US54.90c.
The kiwi continues to outperform the aussie, and rose to A88.00c compared with A87.62c yesterday.
Overnight the kiwi hit A88.20c, nudging levels last seen on the trans-Tasman cross in July (A88.25c).
"We're pushing up highs which haven't been seen since mid to late 1998," Bank of New Zealand currency strategist Stu Ritson said.
"It seems people are just starting to concentrate again on New Zealand's high interest rates, and that accounted for it performing very well against not only the US dollar but also on the cross rates."
Mr Ritson said the kiwi had performed very well during the last week as it broke through key technical levels.
"It's the best performing currency in the last week of the primary currencies, attracting attention from people who have been used to very much range-bound currencies in the last few weeks.
"In terms of buying interest, it's been mostly technical in nature -- model-based accounts -- but overall the pullbacks have been very shallow and we have a very positive feel about the New Zealand dollar," Mr Ritson said.
Any dips were likely to be treated as opportunities to buy by investors who had missed the kiwi on its sudden appreciation in the last 24 hours.
It traded between US48.24/41c today.
On the data front, New Zealand's retail boom shows no sign of abating, with August's seasonally adjusted figures increasing 0.7 per cent, Statistics New Zealand figures showed today.
The rise was greater than market expectations of 0.4 per cent, and outmatched previous increases of 0.6 per cent in July and 0.5 per cent in June.
In the United States, a speech by President George W Bush late on Monday in which he outlined his case against Iraq appeared to weigh on the greenback.
In Wellington at 5pm the US dollar was buying 124.26 yen, compared with 123.53 yen yesterday, while the euro rose to US98.38c from US97.86c.
Worries about a possible war against Iraq, coupled with the latest fall in US share prices, may give the euro and other European currencies an upper hand on the dollar, some dealers said.
On the other crosses at 5pm, the kiwi traded at 0.4916 euro (0.4915), 60.08 yen (59.41), 0.3082 pence (0.3076) and 0.7189 Swiss francs (0.7184).
The aussie was buying $1.1364 compared with $1.1415 at yesterday's close.
The New Zealand dollar trade-weighted index rose to 55.62 (55.35 yesterday), its highest level since July. The 90-day bill yield was at 5.87 per cent compared with 5.85 per cent yesterday and the monetary conditions index tightened to minus 244 from minus 268.
In the bond market, the April 2004 bond yield was at 5.57 per cent (5.60 per cent), the November 2006 yield at 5.87 per cent (5.91 per cent) and the November 2011 bond at 6.12 per cent (6.14 per cent).
- NZPA
<i>Currency:</i> Kiwi continues to rise
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