The New Zealand dollar posted a fresh seven-year high today and was less than a cent off its all-time post-float high hit 16 years ago.
The kiwi hit US70.88c in overnight trading, a level not seen since April 1996. It closed today at US70.65, slightly down on its opening but nearly half a cent up on yesterday's US70.25c close.
Dealers believe the kiwi will smash the record, possibly as early as this week, after comments from European Central Bank president Jean-Claude Trichet appeared to give the green light to more US dollar selling.
"I don't think we're at the top of the cycle yet," said ANZ Investment Bank senior dealer Brad Martin.
Mr Trichet restated the Group of Seven meeting's comments that excessive or disorderly currency fluctuations were undesirable.
Dealers took the absence of euro-negative comments as the go-ahead to buy euros, kiwi and Australian dollars.
"It's hard to see a big sell from here at this stage, it's essentially continued demand for high yielding currencies in particular kiwi, and kiwi's outperformed others across the board," said ANZ's Mr Martin.
Dips remained very well supported by the offshore investors, particularly Asian buyers, he said.
The market was thinned by the US President's Day holiday. He said it would be interesting to see US trader reaction when they returned to the market.
Since it was floated in March 1985, the kiwi hit an all-time high of US74.45c in June 1988.
The Australian dollar was almost as strong, finishing at US79.27c against its US79.05c close yesterday.
BNZ currency strategist Sue Trinh said currency market comments coming from officials did not appear credible.
"With this lack of a convincing tone in the rhetoric, the market just pushed the euro higher and the kiwi got traded along with it," she told NZPA today.
Meanwhile, the euro closed at US$1.2778 (US$1.2726), and the greenback was fetching 105.63 yen (105.47)
On the crosses, the kiwi hit a new all-time high of 0.5538 euro. It eased back to 0.5527 by the close, not far from yesterday's 0.5517 close.
The kiwi strengthened on all the other crosses. By 5pm it was buying A89.10c (A88.87) 74.63 yen (74.05), 37.3743 British pence (37.28), and 0.8710 Swiss francs (0.8700).
The trade-weighted index at 68.91 (68.62) was just under its all-time high of 69.07 in April 1997. The monetary conditions index was at plus 799 (778).
The 90-day bank bill yields were unchanged at 5.60 per cent.
The February 2006 yields were up at 5.49 per cent (5.47), July 2009 bonds were at 5.70 per cent (5.69), and the April 2013s were at 5.86 per cent (5.84).
- NZPA
<i>Currency:</i> Kiwi stretches to new 7-year high, nudging all-time peak
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