The New Zealand dollar hit a new 14-month high against the greenback early today, and also edged above 0.5 euro for the first time in 16 months.
The kiwi then eased from the overnight highs to be buying US73.24c by 8am, slightly below the US73.35c at 5pm yesterday after having
peaked around US73.80c about 4am.
The US dollar fell across the board after an interest rate hike in Australia underscored concerns the Federal Reserve will lag other central banks in ending its loose monetary policy.
The NZ dollar fell away against the aussie, from an 8-1/2-month high near A83.80c just before yesterday afternoon's interest rate announcement, to A82.34c by today's local open. According to Reuters data the Australian dollar also rallied as high as US89.19c, a 14-month peak.
The Reserve Bank of Australia raised its key cash rate by 25 basis points to 3.25 per cent, becoming the first major central bank to hike as the global financial crisis eases.
BNZ Capital strategist Mike Jones said all the stars aligned for NZ dollar appreciation yesterday. They included ongoing US dollar weakness, the surprise rate hike in Australia, and surging business confidence.
The kiwi's overnight rise against the greenback was really a case of riding on the coat tails of the Australian dollar, Mr Jones said.
At the margin, NZ dollar sentiment may also have been underpinned by another solid result from Fonterra's latest online auction, with the average price of whole milkpowder rising 5.7 per cent to be more than 60 per cent above July lows.
The NZ dollar was buying 0.4978 euro at 8am, slightly down from its 5pm level, and was down to 65.04 yen from 65.29.
Against sterling, the kiwi rose to its highest level in quarter of a century at 46.32p early today, according to Reuters data. By the local open it had eased to 46.02p. The trade weighted index was 66.26 at 8am from 66.45 at 5pm.
- NZPA
