The New Zealand dollar held around 10-month highs against the greenback, reached on the back of strong rises in milkpowder prices at Fonterra's monthly internet auction yesterday morning.
The kiwi stayed above US67c after the surge, getting to a high around US67.60c shortly before midnight. After a bumpy session early
today, the NZ dollar was buying US67.39c by 8am.
It was only a week ago that Reserve Bank Governor Alan Bollard was complaining about the strength of the New Zealand currency.
In comments alongside his decision to leave the official cash rate at a record low 2.5 per cent last Thursday, Dr Bollard said the level of the NZ dollar was bringing additional economic risks.
He appeared to be threatening that the OCR could go lower if the currency stayed high. Some economists thought he was trying to jawbone the NZ dollar down but doubted he would have much success.
And while Bollard's statement had some immediate effect, with the NZ dollar falling from around US65.80c just before the announcement to a little below US65c, the trend has been firmly upwards since.
The kiwi is not just flexing its muscles against the greenback. Overnight it reached a 9-1/2-month high of 64.45 yen and a nine-month high of 0.4689 euro. It even managed to reach a one-week high against the similarly strongly performing Australian dollar of A80.45c.
By 8am the NZ dollar was buying 64.01 yen, 0.4676 euro, and A80.12c -- all slightly ahead of levels at 5pm. The trade weighted index rose to 62.31 at 8am from 62.16 at 5pm.
Employment data due out at 10.45am "should temper markets appetite for the NZD throughout today", ANZ bank said.
"However with the USD remaining on very shaky ground, further weak topside attempts cannot be ruled out."
- NZPA
