The New Zealand dollar was likely to head higher during the weekend, holding near two-year highs as sentiment favoured the southern currency.
Of the world's main trading currencies, the New Zealand dollar has been the strongest this year, with a gain of just under 9 per cent.
Driving the kiwi upwards is New Zealand's high interest rate regime and the outlook for higher rates yet.
The Reserve Bank said this week after raising interest rates by 25 points that a rate of 6.5-6.75 per cent was likely by the middle of next year.
At 5pm the kiwi held its 22-month highs at US46.11c after hitting a US46.17c high overnight, compared with its close Thursday at US45.88c.
The aussie was at US54.88c from US54.82c on Thursday night.
One local dealer said the kiwi was subdued yesterday, trading in a tight US45.97/46.12c range.
"The last 30 points haven't been driven by the aussie, that rallied initially but peeled off," he said.
"The kiwi's managed to sustain a level above US46c. There is a lot of independent support for the kiwi, but it's sentiment driven as well so we need the aussie to hold up to continue on with the buying. But at this stage you'd have to say it's done pretty well."
The kiwi could look at US46.30c during the weekend, although that would depend on the aussie breaking through US55c, he said. Support was firm at US45.50/60c, with initial support around US45.80c.
Dealers said it was quite possible the kiwi would have a tilt at US50 cents in coming months.
In offshore trade, the greenback faltered against the yen yesterday with operators becoming wary ahead of the release of US economic data.
US dollar sentiment turned strong following Tuesday's surprisingly robust retail sales data, which also sent US stocks up sharply, but data later in the week failed to impress.
The next focus will be the University of Michigan's preliminary consumer sentiment index for May, due last night.
Meanwhile, Australian analysts said the aussie was currently sitting pretty with supportive yield differentials, a better than expected Asian recovery and an improving global economy. However, with very little long-term investment in the currency market, there was a downside risk.
On the crosses at 5pm the kiwi rose against the major currencies, to eight month highs against the aussie of A84.03c (A83.73c at Thursday's close). It bought 0.5047 euro (0.5035), 58.83 yen (58.59), 31.61 pence (31.46) and 0.7352 Swiss francs (0.7332).
The aussie was buying $NZ1.2006 ($NZ1.1947).
The monetary conditions index was at minus 351 (minus 370) and 90-day bank bills were at 5.87 per cent (5.89 per cent). The trade-weighted index remained at two-year highs, hitting 54.44 from 54.22 at Thursday's close.
On the debt market, the April 2004 bond yields were at 6.19 per cent (6.23 at Thursday's close), the November 2006s were at 6.77 per cent (6.78), and the November 2011s were at 6.89 per cent (6.90).
- NZPA
<i>Currency:</i> Kiwi liked US46c, likely to continue rising
AdvertisementAdvertise with NZME.