By ELLEN READ markets writer
Do not hold your breath waiting for the New Zealand dollar to gain more strength.
Currency strategists say the kiwi has done its dash for now and may give up some of its recent gains.
The currency rose last week to a high of 43.75USc as the United States dollar weakened and there was speculative buying as it broke through key technical levels around 43.2USc.
At the start of the year, forecasters picked the kiwi to hit 47USc by the end of the year, but in a series of steps rather than via a steady climb. The recent move is seen as consistent with this forecast.
"There's good evidence that we are ratcheting higher. We've been waiting for this top side break," Westpac currency strategist Johnathan Bayley said.
Despite the rally, the kiwi has been unable to advance beyond Friday's high, supported by the US dollar's defensive tone but handicapped by a heavy Australian dollar which was facing a large merger and acquisition deficit, Bayley said.
Recent events have fostered a suspicion that the US administration is looking for a downward correction in the greenback. Both the imposition of steel tariffs and United States Federal Reserve chairman Alan Greenspan's mention of US exporter pain and the need for the current account to be reined in have been interpreted as signs that US officials are looking to throw domestic manufacturers and exporters a lifeline.
Bayley said expectations on the importer and exporter sides of the market had moved higher and the currency was likely to establish a new range over the coming month, rather than continuing to climb.
Bank of New Zealand currency strategist Stuart Ritson did not believe the kiwi would go much higher. at current levels for much longer.
As for how the rise would affect traders, he said there was definitely interest from the export sector to buy the currency on dips, but most hedging has been done.
NZ dollar's strength spent for now - strategists
AdvertisementAdvertise with NZME.