KEY POINTS:
The New Zealand dollar looked well set above US70.50c today as the US unit weakened and global investors regained an appetite for carry trades.
The kiwi hit a three-week high of US70.60c, closing at US70.55c, compared with US70.20c yesterday. It has risen 3.3 percent in less than a week.
The US currency generally weakened on reports China would stop stock-piling foreign exchange reserves.
Bank of New Zealand currency strategist Danica Hampton said the kiwi was also dragged higher by stellar performances from the currencies of Britain and Canada, following stronger-than-expected inflation reports in those two countries.
The NZ dollar continued to find support from a range of offshore funds and other leverage-type accounts, Ms Hampton said.
Most of the demand for the kiwi had come from short term speculative players that had been rebuilding carry trade positions during the past week or so, following a recovery in global equity markets and a pick-up in investor appetite for risk.
The kiwi eased against the Australian dollar, which scaled fresh ten-year highs, ending on A87.88c from A87.80c.
The trade weighted index closed on 68.99 from 68.81.
Many analysts were also taking the view that the US dollar's decline was unwarranted and that People's Bank of China Governor Zhou Xiaochuan's comment about China's $US1 trillion stash of reserves had been incorrectly interpreted.
Trading in the Asian session was subdued with Japanese markets closed for a spring holiday.
The dollar was quoted at 117.30 yen while the euro was at $US1.3315 little changed.
The Federal Reserve's two-day meeting ends on tomorrow, and the Fed is seen leaving rates steady at 5.25 percent. Any mention of recent equity turmoil or easing inflation could weaken the dollar further.
Rates:
5pm today 5pm yesterday
NZ dlr/US dlr US70.55c US70.20c
NZ dlr/Aust dlr A87.88c A87.80c
NZ dlr/euro 0.5299 0.5282
NZ dlr/yen 82.75 82.71
NZ dlr/stg 35.97p 36.09p
NZ TWI 68.99 68.81
Australian dollar US80.26c US79.99c
Euro/US dollar 1.3318 1.3294
US dollar/yen 117.28 117.82
- NZPA