Kiwi set to keep flying
The New Zealand dollar performed well against major trading partners in 2013 and there is no reason it won't continue into 2014.
The New Zealand dollar started 2013 at US82.79c, hit a high in April of US86.77c before dropping to a low of US76.82c in June, and finished the year almost back where it started, trading at US82.10c at 2pm on the last day of 2013.
OM Financial senior client adviser Mark Johnson said the currency had been in a "pretty solid uptrend" for the past couple of years.
"The kiwi has performed pretty damn well," Johnson said, adding that he expected it to continue its strong performance in 2014.
The New Zealand dollar, along with other global currencies had been at the mercy of the US Federal Reserve's decisions on its quantitative easing policy through much of 2013.
The US central bank was buying US$85 billion (NZ$103.5b) in assets each month, which was tantamount to printing money and devalued the greenback, to help support the world's largest economy. In May the Fed said it planned to start tapering its asset purchases as the economy strengthened.
This saw the kiwi drop against the US in May, hitting a year-low in June from its 2013 high in April.
Johnson said the market was disappointed in September when the Fed did not begin scaling back its programme and in December the US central bank took the "path of least resistance" announcing a "relatively modest taper" of US$10b in cuts to asset purchases from January.
While tapering back the purchase programme could see the kiwi drop against the greenback, strong New Zealand economic data, projected interest rate hikes and high commodity prices would offset US dollar gains, Johnson said.
The New Zealand dollar was unlikely to appreciate much more against the US dollar in the coming year, he said, adding that he expected it to trade between US77c and US83c during 2014.
Similarly the kiwi has had a strong year against the aussie. The New Zealand dollar started the year at A79.50c, dropped to a low of A78.79c in March, before rocketing to a five-year high of A93.04c in December.
Johnson said he favoured the kiwi over the aussie heading into the new year. He expected the kiwi to hit its limit at A95c in 2014, adding that it was highly unlikely the kiwi would hit parity.