The New Zealand dollar continued to firm, particularly against the Australian dollar, as high interest rates for the rest of the year remained a high probability.
The kiwi, which has rebounded sharply following its battering in March, closed on US63.48c against US63.21c yesterday.
On its Australian dollar cross, the kiwirose to A85.29c from last night's A85.16c close. The aussie ended at US74.43c against the greenback from US74.22c yesterday.
ANZ Investment Bank strategists said yield demand prevailed overnight, after Consumer Price Index data showing inflation rose to 3.4 per cent in the March year put the prospect of an interest rate cut on the back burner.
Some economists have now shunted the likelihood of a rate cut into 2007, from an earlier consensus of September this year.
Such a hold-up was likely to underpin the kiwi, which closed on 64.62 on its trade-weighted index against 64.39 yesterday.
The US dollar was still smarting near seven-month lows against the euro and sterling after the Federal Reserve signalled this week that a two-year campaign of raising short-term rates was nearly over.
The US dollar also took a hit after the currency's trade deficit troubles were thrown into the spotlight by the International Monetary Fund, which said the dollar needed to fall significantly to help fix global imbalances.
But Chinese President Hu Jintao helped soothe any worries about greater yuan strength or flexibility against the dollar during his trip to the United States this week, saying the yuan was not ready for a drastic change in value.
