KEY POINTS:
The New Zealand dollar firmed today after a key economic survey appeared to increase the prospect of a rate rise.
The kiwi closed on US69.55c from US69.36c yesterday.
The NZ Institute of Economic Research's Quarterly Survey of Business Opinion (QSBO) showed business confidence jumped back into the positive, reaching its highest in four years. It showed only a minor retreat in capacity utilisation from near record highs.
Deutsche Bank chief economist Darren Gibbs said the QSBO backed his bank's call for the Reserve Bank to hike interest rates next week by 25 basis points.
And if the Reserve Bank did that, it would most likely hike again in March, unless the OCR was hiked 50 basis points next week, an option that should be considered, Mr Gibbs said.
The broad picture in the QSBO was of an economy clearly gathering steam and wage growth inflation heading up, Mr Gibbs said.
Citigroup economic and market analysis director Annette Beacher said the time was ripe for the RB to follow up rhetoric with action.
The market will be watching tomorrow's quarterly CPI number with usual interest, although a low, or even negative, number is forecast.
Against the Australian dollar, the kiwi rose to A88.83c from A88.31c at 5pm yesterday. The trade weighted index lifted to 69.16 from 68.91.
ANZ Bank said offshore markets continued to search for yield, despite protestations from the local market.
Attempts yesterday to take the kiwi lower had failed miserably when countered by offshore demand.
Trading in major currencies was affected by a US market holiday.
The yen edged lower toward a 13-month trough against the dollar, getting little reprieve despite market expectations for a Bank of Japan rate rise later this week.
Although some sceptics remain, most market players expect the central bank to raise interest rates by 25 basis points to 0.50 per cent at a two-day policy meeting that ends on Thursday.
The following are Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US69.55c US69.36c
NZ dlr/Aust dlr A88.83c A88.31c
NZ dlr/euro 0.5376 0.5363
NZ dlr/yen 83.78 83.40
NZ dlr/stg 35.40p 35.37p
NZ TWI 69.15 68.91
Australian dollar US78.29c US78.52c
Euro/US dollar 1.2936 1.2936
US dollar/yen 120.48 120.25
- NZPA