Kiwi reaches two-week high

The New Zealand dollar rose for the second consecutive of offshore trading on year-end positioning to a new two-week high.

The kiwi peaked at US72.28c before easing to US72.17c at 8am, ahead of its US71.50c level at 5pm yesterday _ despite the greenback strengthening against major currencies.

ANZ chief currency dealer Murray Hindley attributed the kiwi's overnight rise to the illiquid year-end market.

``It's book squaring into the year end and I guess people have just gone into carry trades (from low to high yielding investment),'' he said.

The kiwi was also stronger on the aussie and yen cross rates, rising to A80.68c at 8am from A80.20c at 5pm and to 66.73 yen from 65.92.

The trade weighted index rose to 65.98 at 8am from 65.47 at 5pm.

Reuters reported from New York this morning that the US dollar gained across the board, hitting its highest since early September against the yen, on year-end flows in thin trade and views the US economy is on the road to recovery.

Concerns about Japanese fiscal health also weighed on the yen after rating agency Standard & Poor's said Japan's credit rating could be in danger if policy initiatives fail to stabilise and gradually reduce the country's debt burden.

A report showing US Midwest business activity expanded far more than expected in December helped reinforce views that the US economy is on the mend, analysts said.

Midway through the New York session, the dollar had reached a high of 92.77 yen according to Reuters data, its highest since September 8.

- NZPA