The New Zealand dollar yielded its gains made after the Reserve Bank yesterday left official interest rates unchanged in its quarterly review of monetary conditions.
By 5pm the kiwi eased to US49.46c from Tuesday's close of US49.73c, while the aussie was at US55.76c (US56.19c).
Against the Australian dollar the kiwi reached a four-year intra-day high of A89.08c, although it closed at A88.69c (A88.51c Tuesday).
"We saw a high of US49.80c, and it drifted back to the close," ANZ Investment Bank chief foreign exchange dealer Murray Hindley said.
"There has been a bit of selling on the (trans-Tasman) cross above A89c, that's weighed on the kiwi a little bit.
"But it looks like the local market's got itself a little bit long after those comments from (governor Alan) Bollard, and we haven't seen any follow-through buying from Asia," Mr Hindley said.
For the second time in a row, Dr Bollard elected to leave New Zealand's official interest rate at 5.75 per cent, compared with Australia's 4.75 per cent, and the US's four-decade low of 1.75 per cent.
He also flagged his intention to maintain a neutral bias in the coming months as the uncertain global outlook moderates local inflation pressures.
"The bank's projections show no change in short-term interest rates over the period ahead."
Mr Hindley said the kiwi should hold around US49.40c overnight, although it could possibly break lower to US49.20c.
The kiwi's resistance was currently around US49.885c, with US50c still proving a difficult hurdle.
The US dollar briefly hit a two-week high against the yen in Tokyo before edging back, overshadowed by a murky outlook for the US economy and worries of possible war with Iraq.
In Wellington at 5pm the US dollar was buying 122.40 yen, up from 120.95 yen Tuesday, while the euro was at $US1.003 ($US1.009).
On the other crosses the kiwi was buying 0.4930 euro (0.4928), 60.53 yen (60.17), 31.32 pence (31.42), and 0.7239 Swiss francs (0.7235).
The Australian dollar was buying $NZ1.1275 ($NZ1.1313)
The 90-day bank bill yield was at 5.89 per cent (5.90), the New Zealand dollar trade-weighted index was at 56.32 (56.31), and the monetary conditions index was at minus 178 (minus 180).
On the bond market the April 2004s were at 5.67 per cent (5.63), the November 2006s were at 5.94 per cent (5.92), the November 2011s were at 6.19 per cent (6.20), and the April 2013s were unchanged at 6.24 per cent.
- NZPA
<i>Currency:</i> Kiwi eases after early gains
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