A flagging United States dollar helped fuel further rises yesterday in the New Zealand dollar, which is currently firing on all cylinders to maintain near two-year highs.
At 5pm the kiwi traded at US46.58c, compared with US46.11c at Friday's close. After hitting 22-month highs on Friday, the kiwi smashed through the key US46.30c barrier that dealers said it could break through if the Australian dollar exceeded US55c.
Yesterday the aussie was trading at US55.17c from US54.88c on Friday.
A local dealer said the kiwi was trading strongly in New Zealand, ending on its highs.
"It's looking good, we think it could push higher up towards US46.70/75c. It's really got a good steam.
"It hasn't been the busiest of days but it has been dominated by people wanting to buy it across the board ... from investment funds to model guys to local corporates, no one type. The US dollar weakness is adding to it as well," he said.
Salomon Smith Barney's New York office has just upgraded its short-term and six-month views on the kiwi and the aussie, to US48.50c for the kiwi by October and US58.00c for the aussie, from US46.50c and US55.50c respectively.
BNZ currency strategist Stu Ritson said the kiwi's rise was essentially driven by US dollar weakness, as doubt sets in against a quick economic recovery in the US and its ability to meet its ongoing deficit.
However, the kiwi also continued generating a certain amount of momentum of its own, based on attractive interest rates.
"The New Zealand dollar rally has been absolutely relentless. It's made nine consecutive higher daily closes so I guess that illustrates how strong this rally is at this point," Mr Ritson said.
On the trans-Tasman cross the kiwi climbed to a three year high of A84.44c, from its Friday close of A84.03c, after breaking above a 4-1/2 year trend line last week.
On the other crosses at 5pm the kiwi was buying 0.5061 euro (0.5047), 58.60 yen (58.83), 31.86 pence (31.61), and was steady at 0.7352 Swiss francs.
The aussie was buying $NZ1.1843 ($NZ1.2006).
The monetary conditions index tightened to minus 327 (minus 351) and 90-day bank bills were at 5.86 per cent (5.87 per cent). The trade-weighted index remained at two-year highs, hitting 54.70 from 54.44 at Friday's close.
On the debt market, the April 2004 bond yields were at 6.20 per cent (6.19 at Friday's close), the November 2006s were at 6.79 per cent (6.77), and the November 2011s were at 6.91 per cent (6.89).
- NZPA
<i>Currency:</i> Kiwis holds on to its gains, eyes higher ground
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