The New Zealand dollar soared to a five-week high and is edging toward 87 US cents, after the Reserve Bank raised the benchmark interest for a third time this year and signalled plans for further hikes remained in place.
The kiwi touched 86.99 US cents on Friday morning, and was trading at 86.82 cents at 8am in Wellington, from 86.50 cents at 5pm a day earlier and 85.50 cents before the Reserve Bank hiked rates. The trade-weighted index gained to 80.83 from 80.70.
Investors have pushed up the value of the New Zealand dollar after gaining comfort from Thursday's monetary policy statement that interest rate rises would continue as the Reserve Bank indicated in its previous statement in March.
Some had bet that governor Graeme Wheeler could soften the pace of his tightening cycle on concern about the effect of lower milk prices on economic growth.
"The market was clearly taken by surprise that the RBNZ did not soften its previous stance," said Kymberly Martin, senior market strategist at Bank of New Zealand.
New Zealand's central bank is expected to deliver another two rate rises this year, according to a Reuters poll of economists taken after Thursday's decision. Nine of 13 economists expect the next rise to come in July.
On Friday, the Real Estate Institute of New Zealand is to release its latest house price data, and the performance of manufacturing index and the food price index will also be published.
The kiwi rose to a 13-month high of 64.23 euro cents overnight, and was trading at 64.01 cents at 8am.
It touched a month-high of 51.64 British pence and was trading at 51.57 pence at 8am. The British pound was weakened by comments from UK Chancellor George Osborne that macro prudential policies may be introduced, implying interest rates at the Bank of England may be lower for longer.
The New Zealand dollar weakened to 92.14 Australian cents from 92.22 cents and was little changed at 88.28 yen from 88.29 yen ahead of a Bank of Japan meeting where no change to policy is expected.
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