Kiwi hits 5-yr high against Aussie
The New Zealand dollar continues to surge against the aussie, touching a new five-year high this morning.
The kiwi reached A92.46c early this morning, and was trading at A92.02c just after noon, from A91.63c at 5pm yesterday.
The New Zealand dollar slipped against the United States dollar to US82.17c from US82.67c yesterday.
The boost to the New Zealand dollar against the Australian dollar follows the Reserve Bank's decision to hold the official cash rate (OCR) at 2.5 per cent. The market expects the Reserve Bank to start lifting interest rates in the first three months of next year.
Across the Tasman, Australia's central bank governor, Glenn Stevens, has been talking up a weaker foreign exchange rate in the hope of improving the Australian economy.
The Australian dollar shed US1c overnight, falling from US90.60c to a low of US89.16c this morning. The plunge saw the aussie close in on the year's low of US88.48c in late August.
ASB head of institutional foreign exchange Tim Kelleher said the strengthening kiwi was due to opposing interest-rate expectations in New Zealand and Australia.
"The Australian market was still pricing in the expectation for interest-rate cuts over there, while seeing increasing interest rates here. So that's where the hot money goes to," he said.
Kelleher said he doubted the Reserve Bank of Australia would raise interest rates in early 2014, but the market disagreed with him.
The New Zealand dollar's surge over the past 48 hours was "meteoric" and it could remain high until Christmas, Kelleher said.
The targeted cross rate between the two currencies was closer to A94c, so the kiwi rise could continue next week, he said.
"That's very good news for holidaymakers, making the Gold Coast look very cheap right now. But it will hurt exporters, like the New Zealand wine industry," he said.