Kiwi hits 5-yr highs against aussie

Last updated 08:56 04/12/2013

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The New Zealand dollar has hit a five-year high against the aussie and has the ability to break into territory not seen in eight years, a strategist says.

The kiwi recently traded at A90.35c, after hitting a high of A90.48c early this morning. The last time the New Zealand dollar reached these levels was in 2008.

The trade-weighted index of major trading partners' currencies was 77.2.

OM Financial senior foreign exchange and derivatives advisor Stuart Ive said the kiwi continued the rally it had shown in recent weeks.

Last week's attempt to go lower had been rejected, Ive said.

The Reserve Bank of Australia's decision to leave interest rates unchanged at 2.5 per cent led to more investors buying the New Zealand dollar. The New Zealand official cash rate is also 2.5 per cent but is expected to rise early next year.

Ive said the next resistance level for the New Zealand dollar was A90.90c. If the kiwi broke through that barrier it would be eying the A95c mark, a high not hit since 2005.

"We're closing the gap fairly rapidly," he said.

If the New Zealand dollar did surpass A90.90c it would become an issue for exporters, Ive said. They would need to get cover in place quickly because higher levels would come into play quickly.

If the kiwi did start heading towards the A95c mark it would also be a concern to the Reserve Bank.

"But that's currencies being currency."

Ive said he expected the kiwi to trade between A90c and A90.70c today.

Australian GDP due out this afternoon was likely to influence the cross, he said.

The New Zealand dollar also performed well against the greenback overnight as the US dollar dropped against a basket of currencies.

The US dollar index lost 0.4 per cent over night, he said.

The New Zealand dollar recently traded at US82.50c, after hitting US82.60c in early trading.

Ive said he expected the kiwi to remain elevated against the US dollar.

However, the exchange rate would be dictated by the outcome of US payroll data for November, which was due out on Friday.

Ive said he expected the kiwi to trade between US82.15c and US82.60c today.

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- Fairfax Media

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