KEY POINTS:
Just two days after the New Zealand dollar made a US3c gain - its biggest in nearly a decade - it climbed nearly another cent today.
It made a six-week high of US74.68c and closed on US74.42c against US73.55c yesterday as support for the US dollar crumbled.
The US dollar reached a record low against the euro while the Canadian dollar - known as the loonie - exceeded parity for the first time in 31 years.
Dealers said the kiwi was now in a new range and could be headed much higher.
"Any pullback will only be into the low US70s," a dealer said.
Direction would be set by the US equity market but concerns about the credit crunch and risk aversion were diminishing.
A Wellington dealer said the kiwi followed the Australian dollar up but his bank also saw strong demand from its local customers.
Bank of New Zealand currency strategist Danica Hampton said the rush of strength for high yielding currencies, including the NZ dollar, came as markets took heart from actions of the US Federal Reserve and the Bank of England.
While their proactive moves had helped calm asset markets they had also given the market a belief that softer US monetary policy would dampen the appeal of the US dollar.
With risk aversion moderating in recent days, improved risk appetite was underpinning investor sentiment, she said.
The kiwi made gains on all currencies, rising to A85.70c from A85.62c against the aussie and to 70.29 on the trade-weighted index from 69.89.
The euro pushed beyond the psychological US$1.40 level. A 50 basis point cut in the fed funds rate on Tuesday has battered the dollar as it has tarnished the appeal of assets denominated in the currency. Traders see this trend continuing given expectations that the Fed may cut rates again this year.
Comments from Fed Chairman Ben Bernanke that global financial losses stemming from disarray in the US subprime mortgage market has "far exceeded even the most pessimistic estimates" did few favours for the dollar as they suggest more credit woes may be on the horizon.
Reuters currency rates
5pm today 5pm yesterday
NZ dlr/US dlr US74.42c US73.55c
NZ dlr/Aust dlr A85.70c A85.62c
NZ dlr/euro 0.5283 0.5266
NZ dlr/yen 85.53 85.28
NZ dlr/stg 37.02p 36.78p
NZ TWI 70.29 69.89
Australian dollar US86.85c US85.95c
Euro/US dollar 1.4086 1.3976
US dollar/yen 114.92 115.85
- NZPA