Bollard surprised as NZ dollar soars to new high

Reserve Bank Governor Alan Bollard says he is surprised by the reaction in financial markets to his more upbeat take on the New Zealand economy which has pushed the kiwi dollar to a new post-float high.

The New Zealand dollar rose as high as 82.97 US cents in New York, the highest level since the currency was allowed to trade freely in March 1985.

The kiwi initially jumped after the Monetary Policy Statement yesterday and extended its gains in offshore trading after equity markets rose and US figures showed improved consumer confidence and record American exports.

Read his full monetary policy statement here.

Bollard yesterday forecast New Zealand's economic growth will soar to 4.8 per cent in 2012 from the 1.5 per cent pace estimated for this year, reflecting the rebuilding of Christchurch and continued high commodity prices.

"It does look like markets have interpreted our forecasts for the New Zealand economy a little bit stronger than I expected," Bollard said in an interview with Radio New Zealand. "I'm a bit surprised about that, quite frankly."

The kiwi dollar's increase does mean there is less need to raise the official cash rate so quickly, he said. Still, globally there is money looking for safe places to be parked and the New Zealand economic story is relatively appealing, while the currency is also underpinned by high commodity prices.

Any increase in the OCR will depend on the flow of data through this year, he said.