The New Zealand dollar popped over 43USc yesterday for the first time in three months.
It closed around 5 pm at 43.00c from 42.54c on Wednesday.
"There has been a resumption of buying from hedge funds and model traders. As the kiwi moves higher it generates its own momentum," Citibank executive Dean Sheridan said.
Volumes were moderate but Mr Sheridan said the worrying thing about the local dollar's rise was that it was achieved in a thin market. In such a market relatively small trades can have a big impact on price.
The kiwi was capped by profit taking around 43.10c and the low was at 42.64c. People with long positions established around 39c were seen selling.
"For the next two or three days the bias is still on the upside but it is running out of steam," Mr Sheridan said.
He believed that the kiwi would soon consolidate around 42.50 to 43.00c.
However, Bank of New Zealand said yesterday that the kiwi could reach 44.50c. But the bank nonetheless cautioned kiwi dollar bulls.
"The move higher has been driven by a conjunction of US dollar weakness, increased exporter demand and buy-side momentum players propelling the currency higher.
"While we see further upside in the short term and believe that a target of 44.50USc is reasonable, the factors that were the drivers for the dollar's weakness over 2000 still exist and we caution longer-term bulls."
- NZPA
<i>Currency:</i> Kiwi tops 43USc in thin trade
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