Currency: Kiwi gallops over US55C

The New Zealand dollar's charge upward continued today as it breached US55 cents for the first time since May 1999.

As the United States dollar continued to freefall on war jitters and poor economic data, the kiwi shot to US55.35c - a fresh 44-month high. It closed at US55.05c, still well up on Friday's US54.70c close.

The kiwi has gained a massive 32 per cent since the start of last year and over 5 per cent in the 13 trading days of this year.

The Trade-Weighted Index, which measures the kiwi against the currencies of New Zealand's five main trading partners, sprinted to 60.77, its highest level since March 1998.

Although the Australian dollar was also the beneficiary of the weak US dollar - rising to US59.07c compared to its close here on Friday at US58.89c - the kiwi stretched to new seven-year highs on the cross. It closed at A93.30c compared with Friday's A92.90c closing level.

Westpac New Zealand chief dealer Basil Payn said there was no reason for the kiwi run to reverse, given the factors that were emasculating the US dollar - weakness in the US economy and worries about war in Iraq.

Friday's data showing a record US trade gap of $US40 billion ($NZ73 billion) for December, soft consumer sentiment and a 0.2 per cent fall in industrial production added to the dollar's woes.

The US dollar touched a new three-year low against the euro of $1.0679 (compared to a Wellington close of 1.0598 on Friday), and a four-month low versus the yen (117.43 yen compared to 118.12 on Friday). The threat of intervention by the Bank of Japan lent the dollar some support.

The kiwi was muscular against all its major trading partners. It was buying 0.5170 euro (0.5154), 65.07 yen (64.62), 34.19 pence (33.99), and 0.7558 Swiss francs (0.7519).

The Australian dollar was at $NZ1.0727 (1.0767).

The 90 day bank bills were flat at 5.86 per cent, and the monetary conditions index was at plus 197 (plus 171) - showing monetary conditions were at their tightest since July 1998.

There was little action in the debt market, where the April 2004s were flat at 5.64 per cent, as were the November 2006s at 5.83 per cent, the November 2011s at 6.14 per cent, and the April 2013s at 6.17 per cent.

- NZPA