KEY POINTS:
The New Zealand dollar hit a new 22-year post-float high against the greenback early today during a bumpy 12 hours.
The kiwi peaked around 4am at US79.45c, according to Reuters data, having been down near 79c earlier in the session.
But by 8.15am the kiwi was at US79.32c, the same level as at 5pm yesterday.
Even a reminder by Finance Minister Michael Cullen yesterday that he has the ability to suspend current monetary policy did not appear to faze the market.
The NZ dollar became even more popular with speculators after strong inflation data on Monday was seen as raising the likelihood the Reserve Bank will lift official interest rates next week.
It is also benefiting from weakness in the US dollar, which softened further across the board overnight after Federal Reserve chairman Ben Bernanke said US housing woes could get worse before they get better.
The kiwi was also buying A90.44c at 8.15am today from A90.30c at 5pm yesterday, 0.5751 euro this morning from 0.5734, and 96.76 yen from 96.58 yesterday evening. The trade weighted index was 75.84 at 8.15am from 75.75.
Bank of New Zealand currency strategist Danica Hampton said the NZ dollar had been underpinned during the past few days by heightened speculation about further rate hikes by the Reserve Bank.
But market participants could not ignore the increasing political backchat surrounding monetary policy and the NZ dollar, she said.
The ANZ bank also commented that Dr Cullen's comments yesterday, although it suspected they were "merely currency jawboning", did reinforce that considerable heat was emerging about the strength of the NZ dollar.
The comments also reinforced the point that while the Reserve Bank had independence, it was merely operational independence and its continuation resided with the discretion of the Government.
- NZPA
