The New Zealand dollar eased today after reaching a near five-year high overnight.
By 5pm the kiwi was at US56.37c, down from last night's close of US56.59c. Its Australian counterpart was at US60.46c after rallying to US60.85c overnight - its highest since June 2000.
Derek Rankin of Bancorp Treasury Services said the market still regarded the top side of the kiwi's range as the favoured end.
"But (the market) really needs to see the Australian dollar moving on, and it needs to see ongoing US dollar weakness, and given what's going on around the world with Iraq and the United Nations, it's really having a breather," Mr Rankin said.
"We've come a long way - the last major high for the kiwi was way back on May 9, 1999 when it was US56.63c, and we managed to get to that point yesterday with a high overnight of US56.80c.
"The market's saying we've got to a new level, where do we go from here? You've pretty much got blue sky (upwards) from here."
Export demand and international currency flows were continuing to drive the kiwi higher, with many market watchers picking the currency to reach a level of US59c or US60c before long.
The kiwis' continued strength presented the Reserve Bank with a difficult decision at its interest rate-setting Monetary Policy Statement on March 6.
If the currency keeps rising the bank will be increasingly pressured to be seen to do something to counteract that.
"The upward pressure is damaging to the export sector ... and the longer (the kiwi) stays up here the more damaging it is," Mr Rankin said.
In a week of big gains, the kiwi has made most ground this week against the pound sterling, which is suffering because of questions about the British economy and Tony Blair's support for a US-led war against Iraq.
Against sterling, the kiwi was buying 35.79 pence at 5pm (35.66 pence yesterday), after reaching 35.90 pence today - its highest point since November 1997.
The local unit also tested a fresh record against the euro of 52.49 - eclipsing a previous all-time high of 52.44 - before closing at 52.42.
Overnight, the greenback was kneecapped by a sharp fall in US consumer confidence in February to its lowest level since October 1993, as Americans fretted about the increasing threat of war with Iraq, weak stock markets and rising oil prices.
In Wellington at 5pm the US dollar was buying 117.42 yen (117.88 yen last night), while the euro was at $US1.0751 ($US1.0791).
On the other crosses at 5pm, the New Zealand dollar was buying A93.23c (A93.47c), 66.18 yen (66.71), and 0.7660 Swiss francs (0.7679).
The Australian dollar rallied slightly against the New Zealand dollar to $NZ1.0727 ($NZ1.0699).
The trade-weighted index was at 61.86, down from last night's five-year high of 62.05, 90-day bills were at 5.80 per cent (5.82), and the monetary conditions index was at plus 281 (plus 298).
On the bond market the April 2004 government bonds were at 5.37 per cent (5.39), the November 2006s were at 5.34 per cent (5.35), and the November 2011s were at 5.74 per cent (5.77).
- NZPA
<i>Currency:</i> Kiwi retreats from multi-year highs
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