The kiwi rose to 67.12 US cents at 8am in Wellington, from 66.47 cents at 5pm yesterday. Photo / iStock
The kiwi rose to 67.12 US cents at 8am in Wellington, from 66.47 cents at 5pm yesterday. Photo / iStock
The New Zealand dollar gained as the country's higher relative interest rates lured investors.
The kiwi rose to 67.12 US cents at 8am in Wellington, from 66.47 cents at 5pm yesterday. The trade-weighted index increased to 72.97 from 72.38 yesterday.
The New Zealand dollar has gained 2.6 percent so far this month as negative interest rates in some of the world's largest economies means the positive yield on offer in New Zealand holds enough allure for investors.
See live rates for the NZ-US $ below. Click for more information:
Traders are doubtful the Federal Reserve will hike rates as much as previously signalled and negative rates introduced by central banks in Japan, Europe, Switzerland, Denmark and Sweden are increasing the attractiveness of the Reserve Bank of New Zealand's 2.5 percent benchmark. While interest rate markets in New Zealand have priced in about 40 basis points of cuts to the official cash rate by year end, the currency market hasn't.
"NZD/USD rallied a little further overnight and looks set to again test the top of the range," ANZ Bank New Zealand chief economist Cameron Bagrie and senior foreign exchange strategist Sam Tuck said in a note.
"Obviously global forces are holding sway and New Zealand still looks better than most. We expect the New Zealand dollar to become more sensitive to local data outturns over the coming months.
Data needs to remain strong to validate current levels. The tightening in financial conditions of late suggests we will see some cracks. The rates market looks to be expecting this while the foreign exchange market is not."
ANZ expects the kiwi to trade between 66.40 US cents and 67.50 cents today.
New Zealand's January trade data is published today at 10:45am.
Elsewhere, traders will be eyeing any comments from the G20 meeting of finance ministers and central bank governors in Shanghai, China.
The New Zealand dollar gained to 60.86 euro cents from 60.30 cents yesterday, jumped to 48.09 British pence from 47.69 pence, increased to 75.81 yen from 74.66 yen and advanced to 4.3843 yuan from 4.3420 yuan. It was little changed at 92.77 Australian cents from 92.68 cents yesterday.