The New Zealand dollar went "nuts" for part of the day yesterday before easing back a little before the close.
At 5pm the kiwi traded at US41.65c, not far from its close of US51.62c Monday. The aussie was at US51.52c compared with its US51.56c close in New Zealand Monday.
"It was one of those funny days - it's gone nuts, then it just stopped about 3pm and drifted back down, it's been very, very quiet since then," one local dealer said.
The kiwi traded between US41.44/87c, with a range overnight picked to be US41.40/70c.
Analysts told Bloomberg the kiwi had its biggest gain in two weeks on speculation Telstra Corp may buy the currency to fund its $413 million bid for Clear Communications Ltd.
Australian-based Telstra's bid was approved by the Commerce Commission on Friday.
Telstra, Australia's largest phone company, wants to merge British Telecommunications New Zealand business with Telstra Saturn.
The decision on interest rates by the US Federal Reserve is due out at 8.15am (NZT) today, with markets pricing in a 25 basis point easing.
However, analysts said the Fed's widely expected move to cut rates was unlikely to give the dollar a boost. Instead market players are awaiting key US reports on retail sales and industrial production later in the week.
In Japan, worries of a prolonged recession grew after the government reported that October private-sector machinery orders in the world's second largest economy plunged to their lowest level in 14 years. The grim data sent the yen as low as 125.93 yen against the dollar, its lowest level since April.
The euro was trading at US89.12c compared with its US89.94c close here Monday.
On the crosses at 5pm the kiwi was trading at A80.89c (A80.49c at yesterday's close), 52.45 yen (52.28), 29.06 pence (29.06), 0.9141 marks (0.9150), 0.6926 Swiss francs (0.6909) and 46.84 euros (46.79).
The Australian dollar was buying $NZ1.2364 from $NZ1.2391.
The trade-weighted index was at 49.94 (49.90), the 90-day bank bills were at 4.89 per cent (4.88) and the monetary conditions index was at minus 881 (minus 885).
On the debt market, the March 2002 bonds were at 4.74 per cent (4.76 percent), the April 2004s were at 5.59 per cent (5.63), the November 2006s were at 6.20 per cent (6.25) and the November 2011s were at 6.61 per cent (6.63).
- NZPA
<i>Currency:</i> Kiwi soars before settling back
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