The dollar has risen to a new five-year high against its Australian counterpart, with analysts picking it will break 90 Australian cents soon.
The dollar gained half a cent overnight on Wednesday after news that dairy cooperative Fonterra was lifting its payout to farmers and business confidence had risen to a 14-year high.
As well, the Australian Reserve Bank governor has hinted at an interest rate cut next week, while New Zealand's central bank is moving in the other direction.
At 7pm on Thursday, the kiwi was trading at about 89 Australian cents.
The currency has appreciated nearly 12% against its Australian counterpart since March, but has risen rapidly in recent weeks.
Analysts say that reflects a cooling Australian economy and signs its central bank will cut interest rates again soon. In contrast, New Zealand's relatively buoyant economy is likely to prompt interest rate increases in 2014.
Australia is New Zealand's biggest trading partner, and economists say a rising exchange rate will make it harder for exporters to compete with their international rivals and curb returns.
But for those considering a mid-winter holiday, Australia is now much cheaper and travel agents are expecting a strong lift in bookings across the Tasman.
Analysts say the New Zealand dollar now appears overvalued, but there are few signs it is going any way but up for now.
Westpac currency strategist Imre Speizer says the latest economic data for New Zealand is a factor in the kiwi's rise and it adds to the case for inflation pressures.
He says the business confidence survey shows pricing intentions have risen, which points to prices eventually rising far more quickly than they have done.
Mr Speizer says analysts were expecting the New Zealand dollar to reach 90 cents Australian by around Christmas, but it's happening a lot more quickly than expected.