The New Zealand dollar hit a 4½ year high against its Australian counterpart on Wednesday after comments Reserve Bank of Australia and weaker economic data.
The Australian dollar fell against all major currencies after RBA Governor Glenn Stevens said the bank stood ready to help support an economy facing a peak in the mining investment boom.
The kiwi has been tracking higher against the Aussie since early 2011 when the exchange rate was in the low 70's. It's been accelerating in the last few months and hit just over 85 Australian cents on Wednesday.
Westpac market strategist Imre Speizer said the last time the kiwi was at that level was 2008.
He said the Reserve Bank of Australia is cutting rates, while the Reserve Bank of New Zealand will eventually start pushing up rates which is based on the respective fortunes of the two economies.
Mr Speizer said that is why the cross-rate has been rising and will continue to rise a bit further with an expectation that the New Zealand dollar will reach up to 88 Australian cents by late this year.
He said that will have a negative affect for the part of the economy that is exposed to exports to Australia.
But Mr Speizer said the kiwi has fallen against the US dollar and a large part of the economy is focused on export receipts in US dollars and those exporters will be gaining some benefits.