New friends offshore pushed the New Zealand dollar ever higher today, kicking momentum buying into action.
At 5pm the kiwi traded at US43.57c, down from its morning highs around US43.60c, but still up on Friday's close of US43.21c.
Dealers said the surge followed a break above the technical barrier of US43.50c, which had also pushed the trade weighted index to 52.56, its highest level since mid-June 2000.
Bancorp Treasury Services economist Stuart Marshall said the kiwi's rise since Friday had been a surprise because it was happening in isolation from the aussie and euro.
"The most significant aspect is still the New Zealand dollar's gone up with no support from the Australian and European so that has to give you cause to pause."
Most of the buying was coming from offshore, however, which was why the kiwi eased off during the New Zealand trading day.
"It's been notable that all the gains have been made while New Zealanders have been asleep."
Mr Marshall said he was at a loss to explain the overseas interest, since New Zealand's market was small and hard to get out of quickly.
However, government debt concerns in Australia and US dollar weakness were probable factors in the kiwi's favour. The kiwi had consistently broken resistance levels before the aussie, and buying was coming from names not usually seen.
Bank of New Zealand currency strategist Stu Ritson added more.
"Initially it was supported by the improving global growth outlook, and then momentum accounts came over the top...That's pushed the kiwi through a very important technical level on Friday night which is US43.50."
However, he was cautious about the kiwi remaining at these levels.
"It's come a long way very quickly. I think it's fairly well priced, we may see a bit of topside but I see the risk probably more skewed to the downside. The kiwi invariably can't hold on to its rallies."
The rise in the TWI -- an averaging of the kiwi against its five main trading partners -- was not unusual since the kiwi was stronger against the greenback, by far the biggest part of the formula, analysts said.
The kiwi also hit its highest levels against the euro since June last year (.4954 at today's close) and against the aussie since September last year (A82.92).
The Bank of New Zealand expects a short-term spike in the kiwi of half a US cent, if the Reserve Bank raises interest rates on Wednesday. Analysts are divided but the BNZ is forecasting the official cash rate to rise by 25 basis points to 5.00 per cent.
On the crosses at 5pm the kiwi rose against all major currencies to trade at A82.92c (A82.54c at Friday's close), 56.65 yen (55.81), 30.64 pence (30.39), 0.7243 Swiss francs (0.7150), and 0.4954 euro (0.4891).
The aussie was at $NZ1.2063 ($NZ1.2118 at Friday's close), and at US52.55c (US52.35c) against the US dollar.
The trade weighted index closed at 52.54 (52.02), the monetary conditions index tightened to minus 583 (minus 638), and 90-day bank bills were at 5.33 per cent (5.27).
On the debt market the April 2004 bonds were at 6.03 per cent (6.08), the November 2006s were at 6.67 per cent (6.71), and the November 2011s were at 6.89 per cent (6.95).
- NZPA
<i>Currency:</i> Kiwi finds sudden popularity with friends offshore
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