The New Zealand currency traded in a tight but positive range yesterday, after an overnight sprint that had the kiwi at its highest level in a year.
On Wednesday night the kiwi reached US44.31c in New York, but during the day it dozed in a 9-point range, closing at US44.01c. That was still a great improvement on Wednesday's close of US43.58c.
Dealers said the range had been subdued by importers eager to take advantage of the kiwi's rall y by selling their extra currency.
"It's been pretty quiet, but still looking pretty positive for a move higher," one dealer said.
However, prospects looked good for another surge overnight, with one dealer picking a range of US43.90-44.50c.
Westpac's chief dealer Basil Payn said the kiwi had definitely broken up to new levels on a chart basis and it was quite possible it would rise above US45c or US45.5c in the not too distant future.
Yesterday's levels were better linked to New Zealand's positive growth rates than Wednesday's rise in interest rates, one dealer said.
"The aussie dollar's very buoyant there's been a positivity for the last week or so for both kiwi and aussie ...it's more related to other factors within the market."
The aussie was also up yesterday at US53.01c, compared with US52.78c Wednesday.
On the crosses the kiwi made long-term highs against both sterling and the euro. It was buying A83.03c (A82.58 at Wednesday's close), 0.4971 euro (0.4942), 57.80 yen (57.63), 30.80 pence (30.63) and 0.7271 Swiss francs (0.7237).
The aussie was at $NZ1.2048 ($NZ1.2118).
Sharp rises in bank bill yields and bonds on Wednesday and yesterday appeared to belie Reserve Bank Governor Don Brash's comments that money markets had fully priced in the rate rise.
The monetary conditions index tightened again to minus 522 (minus 557) as 90-day bank bills rose to 5.53 per cent from 5.49 per cent on Wednesday. They have risen 24 basis points since Tuesday's close.
On the debt market, bond yields also continued their steep rise. The April 2004 bonds rose to 6.35 per cent from 6.27 at yesterday's close and 6.08 on Tuesday afternoon, the November 2006s were at 6.84 per cent (6.77 yesterday) and the November 2011s were at 6.99 per cent (7.01).
- NZPA
<i>Currency:</i> Kiwi poised for another strong bounce
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