The New Zealand dollar closed up more than half a US cent yesterday after comments from the Federal Reserve undermined the greenback - perhaps decisively so.
The local dollar hit an overnight high of US46.35c and finished just shy of that yesterday at 46.34c from 45.67c at the nominal 5 pm finish on Thursday.
Chairman Alan Greenspan indicated the Fed's tightening phase might be nearing an end sooner than expected as the economy slowed.
BNZ forex manager Greg Ball said the kiwi's weakness over the past year was a result of the powerful US economy and hence its strong dollar.
He believed yesterday's rally was sustainable, with a break of 46.35c possibly seeing the kiwi go to 46.80c overnight if the euro made gains.
"Twenty-four hours is a very short time in currency markets," Mr Ball said. "Only yesterday people were quite bearish on the kiwi."
BNZ chief dealer Mike Symonds also said it could be an important turning-point.
"Is it a US dollar retrace or the start of something bigger - my view is that it is the start of something a bit bigger."
Bonds followed the US lead, shaving a dozen points off yields.
- NZPA
Kiwi rallies against greenback
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