KEY POINTS:
The New Zealand dollar eased back in a quiet session today after testing US67c in overnight trading.
It was the old story of New Zealand's high interest rates that drove the currency up overnight, with the kiwi the highest-yielder among the world's most-liquid currencies.
It ended today at US66.80c after opening at US66.97c and closing yesterday at US66.55c.
Against the Australian dollar it was buying A86.78c from A86.57c and the trade-weighted index ended on 66.74 from 66.45 yesterday.
Data today was mixed for the kiwi with Statistics New Zealand figures showing 186,600 short-term visitors arrived from overseas in October -- a record for October and up 6 per cent on a year ago.
A Reserve Bank survey showed business managers expect inflation pressures to ease over the next year, backing expectations interest rates will remain on hold in the coming months.
The quarterly survey of expectations showed respondents expected annual inflation to average 3 per cent over the coming year, down from 3.5 per cent in the previous survey in August.
Two-year inflation expectations also eased, to 2.7 per cent from 2.9 per cent in the previous survey.
ANZ bank said the kiwi had been in the spotlight as yield demand overrode local selling interests.
However, ANZ said it would require the Reserve Bank to hike rates in its December 7 Monetary Policy Statement to sustain the kiwi's move higher and today's inflation expectations survey reduced that risk.
"We do not believe the RBNZ will raise interest rates given the current landscape and as such the NZD strength should only be cemented through more USD weakness," ANZ said.
In major currency trading, the yen stayed in sight of a record low against the euro, pressured by expectations that the Bank of Japan will raise interest rates only slowly.
The yen weakened broadly on Monday after a weekend meeting of finance ministers and central bankers failed to offer any significant comments on the yen's weakness or on carry trades in the currency. In such trades, investors borrow the yen to buy a higher-yielding currency.
The US dollar was little changed at 118.05 yen staying while the euro was a tad higher at US$1.2820
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US66.80c US66.55c
NZ dlr/Aust dlr A86.78c A86.57c
NZ dlr/euro 0.5212 0.5182
NZ dlr/yen 78.92 78.48
NZ dlr/stg 35.22p 35.12p
NZ TWI 66.74 66.45
Australian dollar US76.98c US76.87c
Euro/US dollar 1.2815 1.2842
US dollar/yen 118.08 117.92
- NZPA