KEY POINTS:
The New Zealand dollar regained its composure today from a negative reaction to yesterday's 0.25 percentage point hike in the official cash rate.
The local currency moved steadily higher from yesterday's close at US68.06c, ending the day at US68.78c.
Dealers said the reaction to seemingly soft comments from the Reserve Bank yesterday had been overdone.
"The tone of the document [RBNZ statement] itself was still reasonably hawkish," Westpac currency strategy Michael Gordon said.
"It didn't initially come across that way but I think looking into it, the risk of a follow-up hike is still very much there."
The TWI was trading at 67.92 from 67.22 yesterday.
Both the Australian and kiwi currencies were also seeing an investor return to high-yielding currencies after last week's rewinding of carry trades in the wake of the Shanghai sell-off.
The Australian dollar strengthened against the greenback from US77.63c yesterday to US77.91c today. Against the kiwi, it climbed from A87.70c to A88.24c.
Offshore, the US dollar was reversing a slump against the yen as investors shifted funds back into riskier assets, even while awaiting US jobs data for clues on the interest rate outlook.
AT 5pm the US dollar had bounced to 117.34 yen from 116.52 yen yesterday and a three-month low of 115.16 yen on Monday.
Major currencies gained strongly against the yen as investors became comfortable about rebuilding carry trades, and traders said a further rise in shares would likely put more pressure on the Japanese currency.
Reuters currency rates:
5pm today 5pm yesterday
NZ dlr/US dlr US68.78c US68.06c
NZ dlr/Aust dlr A88.24c A87.70c
NZ dlr/euro 0.5227 0.5170
NZ dlr/yen 80.72 79.36
NZ dlr/stg 35.60 35.28p
NZ TWI 67.92 67.22
Australian dollar US77.91 US77.63c
Euro/US dollar 1.3155 1.3166
US dollar/yen 117.34 116.52
- NZPA