Momentum pushed the New Zealand dollar to its highest level in 7-1/2 months yesterday, prompting dealers to wonder how far it was climb towards US45c.
At 5pm the kiwi traded at US44.40c, up from US44.18c at Thursday's close. During the session it peaked at US44.46c, its highest level since August last year.
It outpaced the Australian dollar which closed at US53.58c (US53.44c).
A Bloomberg article named the kiwi dollar the best-performing of 17 major currencies this year, gaining 6.7 per cent against the US dollar. The Australian dollar came in third behind South Africa's rand, rising 5.3 per cent.
Overnight the kiwi was expected to trade between US44.30/75c, but dealers were looking for a break later in the evening.
"A lot has to do with the aussie and whether it breaks higher," said one dealer. "It's looking very strong, so you're probably looking to break towards US54c, and the kiwi up through US44.50c, towards US44.80c before it runs into more resistance."
Both currencies were energised by a week of strong economic data and expectations that interest rates would rise. Australia received robust employment figures on Thursday and New Zealand embraced a boost in business confidence, chosing to ignore a poor rural confidence survey.
"The US has been where everyone's been parking their money for the last four or five years but it's come to the stage where they're looking for new investments and with the stock market and interest rates low over there, it's not as attractive as other places such as New Zealand at the moment," said one dealer.
"The New Zealand economy is confirming its growth month after month with good statistics and it was only a matter of time really before people actually took some notice."
On the crosses at 5pm, the kiwi was trading at A82.91c (A82.67c at Thursday's close), 0.5041 euro (0.5024), 58.71 yen (58.07), 30.91 pence (30.79) and 0.7390 Swiss francs (0.7376).
The aussie was at $NZ1.2058 ($NZ1.2094).
The monetary conditions index was at minus 453 (minus 483), the trade weighted index was at 53.50 (53.21), and 90-day bank bills were at 5.71 per cent (5.68).
On the debt market, the April 2004 bonds were at 6.41 per cent (6.42), the November 2006s were at 6.85 per cent (6.87) and the November 2011s at 6.96 per cent (6.97).
- NZPA
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