20 Oct 2009

Dollar continues to climb

6:32 pm on 20 October 2009

The New Zealand dollar hit a fresh 15-year high against the Greenback on Tuesday.

The dollar gained more than 1 cent to US75.6c. It last reached that level in July 2008.

The Kiwi also reached a one-year high against the Japanese yen, but eased against the Australian dollar on Tuesday afternoon after the Reserve Bank of Australia published minutes from its latest cash rate review.

The New Zealand dollar again benefited from a strong day on Wall Street. Third quarter company earnings continued to be stronger than expected, causing investors to dump the Greenback.

United States Federal Reserve chairman Ben Bernanke fuelled more buying of the Australasian currencies when he said on Monday that Asia is now leading the world economy's recovery from recession.

BNZ currency strategist Mike Jones says high domestic interest rates are boosting the Kiwi against all currencies.

Mr Jones says speculators are again taking a punt on interest rates in New Zealand in a revival of the so-called "carry trade" which pushed the dollar over US80c in 2007.

Radio New Zealand's economics correspondent says money market indices show a growing expectation that the Reserve Bank of New Zealand may raise the Official Cash Rate by December this year. It is currently 2.5%.