While New Zealand markets took a breather today, the kiwi dollar held its ground offshore.
In New York, the New Zealand dollar rose to US44.15c from US44.04c in New York trading Friday. Last week it rose as high as US44.29c, its strongest level since August.
The currency rose 4.2 percent last month, its best performance since September, after the Reserve Bank of New Zealand lifted its official cash rate, a half percentage point to 5 percent.
A local dealer said informal trading today saw the kiwi reach last week's heights but then drifted off. At 5pm it was trading at US44.20c, compared with US43.88c at Thursday's close.
The dealer said the kiwi's strength was related to a rise in the Australian dollar, which scaled a seven-month high against the US dollar and a 30-month peak against the yen in Tokyo on Monday.
The aussie reached US53.58c, up from US53.16c on Thursday, helped by Japanese demand and speculation about an imminent hike in Australian interest rates.
It also rose to 71.29 yen by mid-session in Tokyo against 70.35 yen late in Australia on Thursday. This was its first serious foray above the 71.00 yen mark since October 1999.
"It seems aussie yields have risen high enough to tempt even the most reluctant Japanese investor," said a US bank dealer in Tokyo. Dealers emphasised that liquidity was lacking, with Australian markets also on holiday, and that this tended to exaggerate the impact of the buying.
There was also considerable speculation that the Reserve Bank of Australia would decide to strike early and raise the 4.25 percent cash rate when it next makes a monetary policy announcement on Wednesday.
At 5pm New Zealand's trade weighted index was at 53.49, up on Thursday's close of 53.14, while the monetary conditions index had tightened to minus 483, from minus 503 last Thursday.
- NZPA
<i>Currency:</i> Kiwi holds ground in informal holiday trading
AdvertisementAdvertise with NZME.