By ELLEN READ
The New Zealand dollar continues to march higher as the United States currency slumps, but it is expected to dip again before rising to 60USc in mid-June.
At 5pm yesterday the kiwi was at 58.55USc, up from its Friday close of 57.32USc.
The gains came as the euro leaped to a four-year high above US$1.16. Comments by US Treasury Secretary John Snow reinforced views that Washington is happy with a weak US dollar.
Westpac currency strategist Johnathan Bayley said the exchange rate remained driven by US dollar weakness and was likely to sustain Friday's gains this week.
He says Rail America's $158 million bid for Tranz Rail presents the possibility of trading flow, but not in the near future.
ANZ head of foreign exchange John Body said: "We wouldn't rule out a test of 60USc by mid-June but not in this run [because] we'll run into month-end sellers and ahead of the RBNZ [Reserve Bank] statement on June 5."
On a trade-weighted index basis, the New Zealand dollar has been stable between 60 and 62 since February, reflecting the fact that while it has gained against the greenback it has fallen against the euro and the Australian dollar.
Bayley said: "While not in steady decline, the New Zealand dollar is still fairly soft on several crosses, and currency sentiment, while not dismal, has clearly deteriorated in recent weeks.
"The peak in New Zealand's growth cycle and last month's Reserve Bank easing are making the kiwi gradually more vulnerable to global growth expectations after a long period of yield-sourced immunity."
<i>Currency:</i> Kiwi still gaining on greenback
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