5.40pm
A firm Australian dollar and US dollar weakness have helped the New Zealand dollar cling to a new six-year high today.
At 5pm in Wellington, the kiwi was fetching US64.70c, just three points off its session high, and well up on yesterday's US64.33 close.
The aussie dollar also rose to a fresh six-year high of US73.32c before closing here 10 points down at US73.22c (compared to US72.89c).
The high preceded Australia's decision to raise its cash rate by a quarter percentage point to 5.25 per cent -- the highest among industrialised countries.
Interestingly, the aussie initially dipped under US73c when the rate hike was announced because it was so widely expected, said Bank of New Zealand currency strategist Mike Jansen.
"It was a bit of a 'buy the rumour, sell the fact' story," he said.
Market focus now goes on whether New Zealand's central bank will also raise its cash rate tomorrow. Mr Jansen said speculators have already heavily bought aussie and kiwi currency in anticipation of higher interest rates.
"No one's really wanting to sell either aussie or kiwi because it's expensive to do so," he said.
"The other thing is, the offshore is expecting a rate hike from the RBNZ tomorrow, the local market less so and if (interest rates remain static), the kiwi could drop reasonably sharply. Maybe 50 points."
Both currencies have also followed the euro which rose to a new high against the greenback. The euro rose to a high of $1.2115, before pulling back to $1.2084 ($1.1982) on profit-taking.
"In a word, market players are cutting dollar positions in a show of dislike of what is going on in the Middle East and Bush's policies," said Kosuke Hanoa, head of forex sales at Royal Bank of Scotland.
"As a result, strong figures are essentially meaningless."
Against the yen, the greenback was buying 108.77 yen (109.28).
At 5pm, the New Zealand dollar was buying A88.36c (A88.29c), while the aussie was buying $1.1318 ($1.1330). The euro was at US$1.2085 (US$1.1982).
On other crosses, the kiwi was buying 0.5354 euro (0.5367), 70.37 yen (70.30), 37.42 pence (37.40), and 0.8332 Swiss francs (0.8338).
The trade weighted index was at 65.58 (65.46), while the monetary conditions index was flat at plus 537, and 90-day bank bills were at 5.43 per cent (5.44).
On the debt market, April 2004 bonds were at 5.27 per cent (5.28), February 2006s were at 5.84 per cent (5.83) and November 2011s were at 6.23 per cent (6.24).
- NZPA
<i>Currency:</i> Weak greenback and aussie interest hike boost kiwi
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