The New Zealand dollar soared to a more than 6 year high as the United States dollar sank lower following the G7 meeting of finance ministers over the weekend, a broker said.
At 5pm, the kiwi was at US69.85c (from US69.50c at the same time yesterday), having traded between US69.47c and
US69.85c, its highest since May 1997.
The Australian dollar experienced a similar rise and was at US77.93c (US77.48c).
BNZ currency strategist Sue Trinh said she was surprised the kiwi had posted fresh highs after the G7 meeting in Florida.
Leaders of the G7 rich economies warned at the meeting that "excess volatility" and "disorderly movements" in exchange rates could hobble world economic growth.
Analysts said a communique issued after the meeting gave European policy-makers a global seal of assent to their efforts to talk down the euro -- whose surge threatens the region's export-led recovery.
But, the opposite had happened, Ms Trinh told NZPA today.
"The market hasn't been convinced that is the case and they've pushed the euro higher, which has dragged the kiwi up," she said, noting there was likely to be a correction in the kiwi in the weeks ahead.
"At the moment the kiwi is being buoyed a lot higher by the interest rate story, which no other currency really has the support of (to the same extent)," Ms Trinh said.
The official cash rate in New Zealand is 5.25 per cent compared to the 1 per cent benchmark rate in the United States.
Across the board weakness in the US dollar was the underlying factor in the euro's rise.
Today, the euro closed at US$1.2740 (US$1.2714), while the greenback was fetching 105.64 yen (105.69).
Meanwhile, on the crosses, the kiwi was buying A89.61c (A89.83c), 0.5483 euro (0.5472), 73.76 yen (73.55), 37.45 British pence (37.55), and 0.8602 Swiss francs (0.8577).
On a trade weighted basis, the New Zealand dollar was at 68.46 (68.37).
The monetary conditions index was at plus 767 (762), and 90-day bank bills were at 5.60 per cent (5.62).
February 2006 bond yields were at 5.53 per cent (5.58), July 2009 bonds were at 5.73 per cent (5.78), and the April 2013s were at 5.86 per cent (5.91).
- NZPA
