The New Zealand dollar maintained its new range well above US56c today, and came equal to its highest level against the euro.
By 5pm, the kiwi was at US56.59c, well up on yesterday's close of US55.91c, while its Australian counterpart was at US60.55c, just off a 2-1/2 year high this morning and well up on last night's US59.87c.
The kiwi jumped sharply overnight on talk of an upcoming interest rate cut in Europe boosted investors' appetite for commodity currencies.
One local dealer said the kiwi had been stuck in its new range during the day, trading between US56.34/59c.
While it provided few fireworks during the day, the kiwi maintained its momentum to close at a five-year high against sterling of 35.66 pence (35.45 last night), and its highest level against the euro since June of 52.44 euro.
"There was selling first up this morning as people came in and saw some new levels, and importers and the like look to get some cover by the end of the month.
"It was a combination of profit-taking, and importers getting in on the fact we rose so strongly overnight."
He picked a range overnight of US56.35/75c. The kiwi was now supported at US56.25c, and would encounter resistance at US57.00c.
The Australian dollar rose to its highest since June 2000 as international prices surged for gold and commodities which Australia exports.
The kiwi is among a basket of currencies, including the aussie and South African rand, that could benefit as commodity prices rise, because of a reliance on raw materials for export earnings.
The Australian and New Zealand dollars have rallied about 8 per cent, while the rand and Canadian dollar are up 6 per cent.
Dealers said the increasing likelihood of war on Iraq was making investors wary of not only the greenback, but also the euro and yen.
The yen managed to erase earlier losses in Asia after a missile fired by North Korea into the Sea of Japan appeared to be part of a military exercise.
In Wellington at 5pm, the US dollar had eased to 117.88 yen, compared with yesterday's local close of 118.36 yen, while the euro was at $US1.0791 ($US1.0736).
On the other crosses at 5pm, the New Zealand dollar was buying A93.47c (A93.40c), 66.71 yen (66.18), and 0.7679 Swiss francs (0.7653).
The Australian dollar eased slightly against the New Zealand dollar to $NZ1.0699 ($NZ1.0709).
The trade-weighted index was at 62.05 (61.57), 90-day bills were unchanged at 5.82 per cent, and the monetary conditions index was at plus 298 (plus 261).
The bond market rallied, with April 2004 government bonds at 5.39 per cent (5.44), the November 2006s at 5.35 per cent (5.43), and the November 2011s at 5.77 per cent (5.83).
- NZPA
<i>Currency:</i> Kiwi reaches 5-yr high against sterling
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