NEW YORK: The New Zealand dollar rose to its highest in almost four weeks against the Australian dollar as investors favored the higher yields on offer in New Zealand.
The kiwi touched 95.39 Australian cents overnight, its highest level since January 16, and was trading at 95.28 cents at 8am in Wellington, from 94.91 cents at 5pm on Tuesday.
The local currency slipped to 74.01 US cents from 74.33 cents.
In a global environment where some 17 central banks have cut interest rates so far this year, overseas investors are lured to the higher yields on offer in New Zealand, where rates are expected to remain on hold for some time.
Traders are betting the Australian Reserve Bank may reduce the benchmark interest rate by 35 basis points over the next year, after cutting the rate to a record low 2.25 per cent this month, according to the Overnight Swap Index.
In comparison, New Zealand’s central bank is seen reducing its 3.5 per cent rate by just 16 basis points over the same period.
“Offshore traders continue to focus on the diverging trends in New Zealand dollar and Australian dollar fundamentals which will keep this cross elevated over the medium-term,” said ANZ’s Con Williams.
In New Zealand, data is published on electronic card spending for January and the Real Estate Institute releases its January housing report.
Australia has consumer confidence and home loans reports scheduled for release.
The New Zealand dollar weakened to 65.36 euro cents from 65.55 cents a day earlier after a report said European officials would make a compromise proposal to give Greece another six months to negotiate a deal.
