KEY POINTS:
The New Zealand dollar was nudging US80c today as it climbed to a seven-month high.
It peaked at US79.87c against the greenback in thin global trading with US markets on holiday as carry trades came back into favour.
It closed on US79.70c, compared with its US79.46c close yesterday.
The kiwi is close to levels that prompted the Reserve Bank to intervene in the currency market half way through last year, but analysts do not expect a repeat, blaming strength of the kiwi on a weak greenback and widening interest rate differentials.
ANZ Bank said the NZ dollar was now approaching the top of its recent trading range and should struggle to break through given significant selling interests at that level.
Apart from against the aussie dollar, the kiwi rose on most crosses and hit a six-month high of 73.31 on the trade-weighted index, its highest level since August.
ANZ bank said the NZ and Australian dollars continued to find a solid base of support as the kiwi rode along on the aussie's coat-tails with further interest rate hikes expected across the Tasman.
The Australian dollar rose to a three-month high of US91.87c compared with US91.30c yesterday after it was revealed Australia's central bank had considered raising interest rates by a more aggressive 50 basis points at its February 5 policy meeting. Minutes of the meeting released today pointed strongly to further hikes ahead.
In the end, the Reserve Bank of Australia's (RBA) board decided "members were strongly of the view that a significant slowing in demand from the pace observed through 2007 would be required for inflation to return to the target," the minutes showed.
In contrast, the Federal Reserve has slashed benchmark interest rates since September to 3 per cent from 5.25 per cent, with investors expecting another rate cut next month.
The high-yielding aussie and kiwi both struck two-month highs against the yen. The Australian dollar rose 0.6 per cent to 99.42 yen while the New Zealand dollar was up 0.2 per cent at 86.15 yen
Currency rates:
NZ dlr/US dlr US79.70c US79.46c
NZ dlr/Aust dlr A86.72c A87.05c
NZ dlr/euro 0.5435 0.5414
NZ dlr/yen 85.6.18 85.69
NZ dlr/stg 40.88p 40.52p
NZ TWI 73.12 72.92
Australian dollar US91.87c US91.30c
Euro/US dollar 1.4662 1.4679
US dollar/yen 108.15 107.84
- NZPA