NZ dollar close to record highs against aussie and strong against yen and euro.

The New Zealand dollar is heading for a 5 per cent decline against the greenback in 2014, a year which saw the kiwi soar close to a post-float high and prompted the central bank to intervene to bring it down.

The kiwi began the year at US81.91c and touched US88.35c in July - within a whisper of its post-float high of US88.40c - but has since declined to trade recently at US77.85c. The expanded trade-weighted index is at 79.13, having started the year at 77.86.

The currency was on a tear in the first half of the year, driven by optimism from the rebuilding of earthquake-damaged Christchurch and Fonterra Co-operative Group's record payout to dairy farmers.

Reserve Bank governor Graeme Wheeler hiked the benchmark interest rate at four consecutive meetings to ward off inflation, bolstering the kiwi's appeal in a global environment of record low interest rates.

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In the second half of the year he stepped up efforts to pull the kiwi back down, citing weakening commodity prices, and intervened in the currency market to help push it down through key support levels.

"The year started with a lot of hope for the New Zealand dollar, supported by the fact that the economy was going to be going well, along with the sugar rush from Christchurch, and hopes that the Reserve Bank would start raising the official cash rate," said Peter Cavanaugh, senior adviser at Bancorp Treasury Services. "Then the Reserve Bank stopped, global growth appeared to be struggling and we saw a fall in commodity prices, notably dairy, which put a cap on the New Zealand dollar, and other commodity prices also fell.

"It has been volatile. It has been ups and downs in the extreme."

Heading into the end of the year, the kiwi is close to record highs against the Australian dollar and is also strong against the yen and the euro, reflecting comparatively weaker economies where policymakers are expected to introduce more stimulus.

That could see Wheeler continue his campaign against the "unjustified and unsustainable" kiwi in 2015.

Meanwhile, the US dollar is ending the year on a high note, as traders bet a recovery in the world's largest economy will see the Federal Reserve hike interest rates next year.

"2014 has ended with signs of a resurgent US dollar, particularly against the euro and the yen," said Cavanaugh.

"The New Zealand economy is not doing badly, particularly against most of our trading partners, we are actually doing jolly well."

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He said the kiwi might track beside, or a fraction behind, the stronger US dollar in 2015.