The New Zealand dollar snoozed through local trade yesterday as Independence Day celebrations kept American investors at bay.
By 5pm the kiwi was at US48.38c from US48.45c at Thursday's close -- having fended off a brief dip towards US48.20c earlier in the session.
Its Australian trading mate was at US55.69c (US55.67c).
Local dealers said the kiwi was likely to remain capped at US48.60/65c over the weekend, despite a Reuters survey predicting the unit will hit US51c by the end of the year and US53c by next June.
The poll of 10 research houses showed an average forecast for the kiwi of US51.4c by December 2002 and US52.9c by June 2003.
The kiwi's continued recovery from below US40 cents last September has been driven by a weakening US dollar, strong domestic economic fundamentals, and a high interest rate differential between New Zealand and other countries.
"The overriding driving force will be the global weakening of the US dollar, which still hasn't finished," Deutsche Bank chief economist Ulf Schoefisch said.
Most of the kiwi's gains against a broadly weaker greenback were between late February and late June, during which the unit rose around eight cents or 19 per cent to peak just above US50 cents, before consolidating at around US49 cents.
Relatively high interest rates are also playing their part.
"We were first one out of the blocks on the tightening cycle so it's very attractive to put money here at the moment relative to other countries," Dr Schoefisch said.
The Reserve Bank of New Zealand has raised its benchmark interest rate by 25 basis points four times since March, to 5.75 per cent, with further rises expected.
Next week investors will be on the lookout for a bevy of local data including May monthly retail sales, the NZIER's quarterly survey of business opinion and the ANZ job ads index.
On the crosses at 5pm the kiwi was trading at A86.88c (A87.02c), 58.27 yen (58.35), 31.81 pence (31.74), 0.7264 Swiss francs (0.7271) and 0.4957 euro (0.4967).
Against the kiwi, the aussie was buying $NZ1.1510 ($NZ1.1489).
On the money market 90-day bills were flat at 6.01 per cent, the trade-weighted index was at 55.38 (55.46) and the monetary conditions index eased to minus 253 (minus 245).
On the debt market the April 2004 bonds were at 5.99 per cent (5.98), the November 2006 bonds were at 6.39 per cent (6.37), and the November 2011 bonds were at 6.63 per cent (6.60).
- NZPA
<i>Currency:</i> Kiwi snoozes as US holiday dampens interest
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