NEW YORK: The New Zealand dollar has risen to a record against the Australian dollar as investors favour the outlook for the local economy; increasing the possibility the two currencies may reach parity.
The kiwi hit 96.77 Australian cents, beating its previous post-float high of 96.52 touched in January, and was unchanged at 96.34 cents at 8am in Wellington, from its level at 5pm on Monday.
The local currency slipped to 74.81 US cents from 75.05 cents.
The kiwi has gained 3 per cent against the Aussie so far this month after the Reserve Bank of Australia cut interest rates to a record low 2.25 per cent while New Zealand’s central bank signalled rates were likely to remain on hold at 3.5 per cent.
Investors were buoyed by strong New Zealand retail sales and services data and all eyes will now be on the GlobalDairyTrade auction overnight as prices for the country’s largest commodity export improve, while in Australia iron ore prices remain subdued.
‘It’s really the divergent external and internal views of the two economies,’ said ANZ’s Sam Tuck.
‘While that dynamic continues it’s pretty hard to see the New Zealand dollar underperforming the Australian dollar which is what would be required for it to head back in the other direction.’
The kiwi may advance further as investors favour selling the Aussie against the US dollar, rather than the kiwi, he said.
