KEY POINTS:
The New Zealand dollar got altitude sickness today after breaking above US82c for the first time since it was floated in 1985.
It hit a 23-year of US82.15c but then eased back to US81.53c compared with US81.46c yesterday.
BNZ currency strategist Danica Hampton said the kiwi was dragged up by a combination of a weak US dollar and a strong Australian dollar, which closed well above US94c and at a 24-year high.
"The big story was the weak US dollar and until that is reversed we won't see a pullback," she said.
But the kiwi lost ground on the aussie - falling to A86.44c from A87.18c yesterday - on concerns about New Zealand's growth prospects.
A "bleak" business confidence survey out yesterday suggested economic growth this year will be below 1.5 per cent.
She said the high dollar would hurt growth along with the crumbling housing market and drought in some regions.
Conversely, Australian has some strong economic data which strengthened the prospects for a rate rise next week.
The US dollar fell on reports of a sharp drop in durable goods orders and home sales that fuelled recession worries and Fed chairman Ben Bernanke signalled a readiness to cut interest rates again.
In contrast, the euro was supported by comments by ECB Governing Council member Axel Weber, who said on Wednesday that market expectations for the European Central Bank to cut rates failed to take account the dangers of higher euro zone inflation.
All 15 Wall Street dealers surveyed in a Reuters poll expected a March rate cut and saw the Federal Reserve bringing interest rates lower than previously thought.
The Fed has cut its benchmark overnight lending rates by 2.25 percentage points since mid-September to 3 per cent, while the ECB has kept its main rate at 4 per cent.
Surging commodity prices continued to underpin currencies such as the Australian dollar.
The New Zealand trade-weighted index ended the day on 73.61, slightly down on yesterday's 73.85 close.
Currency rates:
NZ dlr/US dlr US81.53c US81.46c
NZ dlr/Aust dlr A86.44c A87.18c
NZ dlr/euro 0.5398 0.5430
NZ dlr/yen 86.75 87.18
NZ dlr/stg 41.12p 41.00p
NZ TWI 73.61 73.85
Australian dollar US94.41 US93.43c
Euro/US dollar 1.5108 1.5001
US dollar/yen 106.29 107.05
- NZPA
