The New Zealand dollar traded near a two-week high against the greenback yesterday amid speculation that increasing food prices in Asia would boost this country's exports.
The kiwi spent the day hovering well above the US77c mark following a solid buy-up of this country's currency overnight on Monday.
By 5pm,
the kiwi was at US77.17c, up from US76.82c on Monday.
Westpac senior markets strategist Imre Speizer said it was possible the New Zealand dollar would break through US78c this week.
ANZ head of markets and strategy Khoon Goh said this country stood to benefit from higher food prices, given its large amount of food exports.
"There's scope for the New Zealand dollar to outperform in the near term," Goh said.
Speizer said the kiwi would not go any further against the greenback than the US78c mark, and would then enter a decline.
The New Zealand dollar was the world's top-performing currency in Monday night trading, he added.
Speizer said it was possible investors had been paying increased attention to the release of Consumer Price Index inflation figures tomorrow.
Westpac is expecting inflation to have risen 2.3 per cent for the quarter ended December.
"That's a whopping number," Speizer said, adding that October's rise in GST contributed to the increase.
Inflation must be quelled with higher interest rates, which drive investor interest in the kiwi.
Speizer said Fonterra's online auction was likely to show a rise in international milk powder prices.
The kiwi was trading at A77.7c against the aussie last night, and 48.5p against the British pound.
- ADDITIONAL REPORTING: BLOOMBERG
