By ELLEN READ
The New Zealand dollar is at its highest value in several years against a number of trading partners and experts predict more strength to come.
"I'm reasonably sure we're going to see 70USc sometime this month," ANZ head of foreign exchange John Body said.
"The US dollar looks like it's in a bit of trouble and the high yields are back in fashion.
The kiwi's post-float high against the greenback was 72.70USc, hit in June 1988.
Against the British pound, the kiwi hit 38.16p last week, its highest level since February 1998.
Westpac senior currency strategist Johnathan Bayley said separate kiwi strength and sterling weakness were behind the levels.
"Sterling has been hammered on its crosses," he said, adding that the pound has been falling since August.
Because the kiwi has been strengthening during this time - largely on expectations of higher local interest rates - the pair had hit the new levels.
"Kiwi/sterling has been the business - for the importers," Bayley said.
"Basically the sterling is in a down trend and the kiwi is well supported.
"I think it will still be fairly firm over the next quarter - for the reason I think all the kiwi crosses will be fairly firm, because we won't get the end-of-cycle signal. And the market hasn't priced in a December hike yet for New Zealand, although it's looking more and more probable."
Next year, even though there was no reason to look for sterling to outperform, the kiwi would underperform as local growth slowed.
Bayley's predictions put the kiwi in the 32p to 33p band by the end of next year.
ASB chief economist Anthony Byett saw the kiwi climbing to 40p before declining.
With the Bank of England coming towards the end of its tightening cycle and the Reserve Bank of New Zealand with more steps to take, upward pressure would remain on the kiwi as investors chased higher yields.
"Put that together with a weak pound and we could see 40p quite easily over the next couple of months. Before Christmas," Byett said.
That means bad news for returning expats bringing home money.
"When I talk to people [doing that], they look for one to three, that is 33p. I can't see that happening until well into next year," Byett said.
He is also picking new highs against the Australian dollar, looking for 96Ac to 97Ac, and a re-test of 70USc too.
He said that would put a lot of pressure on the economy, hurting exporters and importers alike.
Kiwi tipped to hit 70USc this month
AdvertisementAdvertise with NZME.