Extending its impressive rise for the eighth consecutive trading day, the high flying New Zealand dollar has hit a 22 year high above 81 cents.
This is the first time that we have seen the currency trade at these levels since it was freely floated in 1985 and the most bizarre part of the move is the fact that it was not driven by any economic data or news, Instead, yield, risk appetite, commodity prices and Uridashi issuance have been the primary catalysts for the latest move. With 8.25 percent interest rates, it was just a matter of time before the New Zealand dollar manages to catch up with the Australian dollar. For more on the Kiwi, read our special report Can the New Zealand Dollar Sustain its Rally Beyond a 22 Year High. As for the Australian and Canadian dollars, they have been carried higher by the Kiwi even though today’s news should have exerted more pressure on those currencies. The US Treasury announced today that it supports limited gold sales by the IMF, but the fact that these are not likely to be permanent means that the impact on the Australian dollar should be minimal. The IMF also lowered their growth projections for Canada to 1.8 percent, which is pretty much in line with the pace of growth that is expected in the Eurozone and US.
