The New Zealand dollar is heading for a 2 per cent gain against the greenback as investors continue to scale back their bets on the world's reserve currency on the increasing chance US interest rates won't rise as far or as fast as previously thought.
The kiwi rose to US67.63c at 5pm yesterday from US66.29c a week ago in New York. It was up from US67.12c at 8am yesterday and US66.47c on Thursday. The trade-weighted index is heading for a 1.9 per cent weekly gain to 73.46 and is up from 72.38 on Thursday.
A BusinessDesk survey of 11 currency advisers predicted the local currency would trade between US65c and US68c this week, with five expecting little change, four projecting an increase and two picking a decline.
The local currency has benefited from global investors reducing their holdings of the US dollar as heightened volatility in worldwide financial markets raised the spectre of the Federal Reserve pausing plans to raise interest rates.
"When you look at interest rate markets they're pricing in zip prospect of the Fed hiking, and FX markets are still catching up," said Sam Tuck, senior FX strategist at ANZ Bank New Zealand in Auckland. "The kiwi is unstoppable at the moment and part of the reason is the market is still winding back its US dollar positions."
New Zealand's two-year swap rate was unchanged at 2.41 per cent and 10-year swaps fell one basis point to a new record low of 3.06 per cent.
Government figures yesterday showed an unexpected monthly trade surplus in January, and a smaller annual deficit than economists were expecting.
The kiwi jumped to 4.4212 Chinese yuan from 4.3420 yuan on Thursday, climbed to A93.41c from A92.68c on Thursday and gained to 76.31 from 74.66.
It rose to 48.30p from 47.69p on Thursday and is heading for a 5 per cent gain against the pound this week. The British currency has been punished by investors this week on the growing uncertainty over a June referendum to decide whether the nation will quit the European Union. The kiwi climbed to 61.13c at 5pm yesterday from 60.30c on Thursday.