The dollar could continue its resurgence for another couple of weeks but the long-term outlook remains lower, currency dealers say.
The kiwi reached US63.57c yesterday, its highest level in more than a month after sinking below US60c in late March.
Currency dealers expect the kiwi to continue its rise, at
least in the short term, with the Bank of New Zealand predicting a rise to US64c and ANZ expecting it to go as high as US65c.
BNZ currency strategist Danica Hampton said the kiwi had been gaining in part because of the weaker US dollar but local factors had also helped.
A recent run of data showing the economy was proving more resilient than thought meant that any interest rate cut was unlikely and so demand for New Zealand's high interest rates should continue.
"People have started to price in a less dovish RBNZ track," said Hampton. "It looks like we're in a bit of a corrective bounce."
However, the weaker economy would eventually weigh on the currency.
"We still expect more medium-term weakness as growth slows. We do expect the bearish trend to continue, but maybe not for the next couple of weeks," said Hampton, who expects the dollar to be at US58c at the end of the year.
The currency market is awaiting Reserve Bank governor Alan Bollard's latest pronouncement when he sets the official cash rate on Thursday.
He says no change to the 7.25 per cent rate is expected.
