7 Oct 2009

NZ dollar stays high against pound

8:00 pm on 7 October 2009

The New Zealand dollar's rampant form against the Greenback was pushed to one side on Wednesday after the currency hit a 25-year high against the British pound.

Radio New Zealand's economics correspondent says the kiwi was boosted overnight by big gains on Wall Street and the decision by the Reserve Bank of Australia on Tuesday to raise interest rates to 3.25%.

At 5pm, the New Zealand dollar was buying 46 British pence after hitting 46.3 pence overnight - its highest point since the kiwi was floated in 1984.

The NZ currency's best performance since global sharemarkets began to rally in March has been against the US dollar. But this has been surpassed by its performance against the pound in the past three months.

The New Zealand dollar has surged 21% against Sterling during that time against a 15% rise against the Greenback.

Sterling has come in for a battering in recent weeks as concerns mount over the British government's debts.

Derek Rankin, of currency strategist Rankin Treasury, is picking the New Zealand dollar to strengthen further against the pound.

Though the collapsing value of Sterling will please holidaymakers, exporters take a different view.

Britain is New Zealand's fifth largest export market and largest buyer of lamb. But prices are 17% down on the same time last year and collapse of the pound is to blame.

A near 60% jump in prices at Fonterra's milk powder auctions since August this year has helped push the New Zealand dollar higher.