The New Zealand dollar firmed a touch yesterday in line with the Australian dollar in quite busy trade.
The kiwi traded in the 45.19-45.36USc range to end at 45.24USc. Like the aussie, it came under a bit of late selling pressure after a reasonably good run.
The aussie ended at 58.27USc.
Local traders are girding for a big week where forecasts are split on whether Reserve Bank Governor Don Brash will lift interest rates on Wednesday to stem higher inflation or leave them unchanged to help the stalled domestic economy.
Traditionally, higher rates support a currency but this time, if Dr Brash plays the hawk and lifts rates by 25 basis points, the kiwi is likely to explore fresh all-time lows.
"People are chasing growth stories, that's the reason they are buying US dollars. That's why the kiwi is down here," said a senior Wellington dealer.
"If Dr Brash holds rates, you may see a rally in the kiwi. If he moves, the offshore reaction will be that Brash has pulled the trigger again too quickly.
"At the same time as the export sector is trading reasonably well, you have domestic consumption, which is 80 per cent of GDP, still pretty sluggish. I think he can afford to sit on his hands and wait for six weeks," the dealer said.
In the meantime, the kiwi is likely to coat-tail the aussie.
The maturing of euro-kiwi bonds due over the next few months had been contributing to the kiwi's heavy tone, dealers said.
- NZPA
<i>Currency:</i> Kiwi ends week on firm note
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