The Reserve Bank's decision to hike interest rates for the second time in a month failed to budge the Kiwi dollar yesterday.
As expected, the central bank lifted the Official Cash Rate by a quarter of a percentage point to 5.25 per cent, citing robust domestic growth as the reason.
Traders virtually slept through the decision with the kiwi trading in just a 10 point range of US44.07c-US44.17c. It closed at US44.14c against its US43.87c close yesterday.
A Westpac Bank dealer said the kiwi remained buoyant due to strength in the aussie dollar and euro.
"I don't think the actual interest rate rise will be enough to spur us on. I think it's more dependent on future moves of the aussie or euro."
He said the Australian dollar was at a tricky level and while it was "quite high", it was still finding support.
It closed at US53.36c compared with its US53.13c close on Tuesday. If it broke above US53.80c then the kiwi was likely to breach US44.50c, "but at this stage that is still not by any means a certainty".
He expected the aussie to be capped around US53.50c in the short-term and the kiwi was likely to hold current levels.
On the crosses the kiwi appreciated against all its trading partners, trading at A82.65c (A82.57c at Tuesday's close), 0.4999 euro (0.4984), 57.81 yen (57.64), 30.65 pence (30.53) and 0.7340 Swiss francs (0.7309).
The aussie was buying $NZ1.2099 ($NZ1.2100).
The monetary conditions index tightened to minus 490 (minus 508), the New Zealand dollar trade weighted index lifted to 53.07 (52.90), and 90-day bank bills were at 5.75 per cent (5.76).
On the debt market, short-dated bond yields fell. The April 2004 bond yield fell to 6.25 per cent from 6.32 percent, the November 2006s fell to 6.70 percent (6.74), while the November 2011s ended at 6.88 per cent from 6.86 per cent on Tuesday.
- NZPA
<i>Currency:</i> Rate hike fails to budge Kiwi dollar
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