The New Zealand dollar continues to go ahead in leaps and bounds, pushing past two-year highs despite the blow to the economy posed by Covid-19.
The currency traded today at US69.86c, revisiting levels not seen since June 2018, a far cry from the lows of around US57c in March, when the world was still reeling from the impact of the pandemic.
Analysts said a number of factors were driving the kiwi up, but that the most compelling one was the country's strong terms of trade performance.
Another was the market repositioning itself away from the likelihood of the Reserve Bank's official cash rate (OCR) going negative.
New Zealand's terms of trade - a measure of the purchasing power of New Zealand's exports - rose by 2.5 per cent in the June quarter, driven by stronger forestry and dairy product prices.
A "live" index put together by Citibank using up to date, high-frequency data, shows that the terms of trade trend has remained in place.
Hamish Pepper, fixed income and currency strategist at Harbour Asset Management and former Reserve Bank analyst, said the Kiwi was reflecting a strong terms of trade story that had been in place throughout most of the year, as reflected in Citibank's index.
"Essentially the story that it is telling you is that we are close to all-time highs for the terms of trade, so that's the structural support.
"It is saying that our export prices are doing well and we are not having to pay as much for things that we need, such as oil," Pepper said.
Much of the advance in the kiwi has come on the back of reduced expectations for the Reserve Bank to cut interest rates into negative territory in early 2021, because of the economy's ongoing resilience in the face of Covid-19 headwinds.
News of Covid-19 vaccines means the global economy is set to get on to a recovery path next year, analysts said.
Higher global growth usually translates into high commodities prices, which typically means a higher New Zealand dollar.
But a strong kiwi dollar has in the past been a problem for the Reserve Bank, as it brings tighter monetary conditions, often at times when the bank wants them to ease.
"They would obviously like it weaker, but at the same time they realise that there is a reason why it is where it is," Pepper said.
"In the past the Reserve Bank has talked about the strength of the kiwi as being unjustified and they probably could not say that now given the strength of the terms of trade," he said.
The Reserve Bank has also used the word "unsustainable" in its previous statements about the currency, but again Pepper said that it's not clear that it is.
Another key driver is that despite all the Covid-19 uncertainty, the strength of world sharemarkets meant that investors had an appetite for risk and were comfortable holding kiwi dollars - typically viewed as being at the higher risk.
The Reserve Bank has actively tried to "jawbone" the Kiwi lower when it spiked in 2014 and again in 2016.
This time around, Pepper said the bank probably had "bigger fish to fry" in terms of engineering low interest rates.
BNZ currency strategist Jason Wong said the advent of Covid-19 vaccines was going to be positive for world growth next year.
"Even though there are the near-term challenges of Covid spreading across the United States and Europe, the market is always forward-looking, and widespread vaccine use is going to benefit general economic growth next year.
"That's driving up commodity prices in general, so the growth and terms of trade factors go hand in hand."
Wong said the Reserve Bank had been back-pedalling on taking the OCR negative, instead pushing on with its funding-for-lending scheme, which is due next month.
"There is a lot of serious doubt now as to whether the Reserve Bank eases from here, given that it does not feel like we are in need of more stimulus, particularly when you look at the strength of the housing market," Wong said.
So where to from here?
Wong said if the US dollar continues to fall, as many expect, then the kiwi should hit US70c and beyond.