The New Zealand dollar hit a new record against the Australian dollar overnight, with some analysts saying there is nothing to stop it pushing higher to parity.
The kiwi touched a post-float high of 97.07 Australian cents overnight, and was trading at 96.51 cents at 8am in Wellington, from 96.54 cents at 5pm yesterday. The local currency slipped to 75.19 US cents from 75.64 cents yesterday.
The Aussie dollar has weakened as softer demand for iron ore from China, the country's largest trading partner, dents exports and weighs on the economy. The Australian Reserve Bank this month cut interest rates to a record low 2.25 per cent and traders expect further cuts may be looming. Meanwhile in New Zealand, dairy prices are recovering, boosting the outlook for the nation's largest commodity export, helping underpin economic growth as the Reserve Bank is seen keeping interest rates on hold at 3.5 per cent.
"You have got the New Zealand Reserve Bank on hold and you have got Australia cutting interest rates and that is really the major reason, money is coming across the Tasman and it is pushing that exchange rate higher," said Derek Rankin, a director at Rankin Treasury Advisory. "Our economy is seen to be performing better than Australia."
Rankin is among the six in a BusinessDesk survey of 13 currency specialists this week who expect the kiwi to reach parity with the Aussie.
