New Zealand’s dollar climbed to within 0.7 percent of a post-float record after stronger-than-expected exports added to the currency’s allure amid signs of an uneven recovery in the U.S. economy.
New Zealand’s currency rose this month after Reserve Bank Governor Graeme Wheeler increased interest rates for a third time in 2014. Borrowing U.S. dollars to buy the kiwi in what’s known as a carry trade has returned 8.4 percent this year, the most among developed-nation peers. A gauge of the dollar against 10 major counterparts was set for the worst first-half performance in three years as weaker-than-expected U.S. economic data supported bets borrowing costs will remain near zero. The yen advanced to a five-week high versus the greenback.
“Given the momentum behind the kiwi at the moment, the prospects are really quite high in the near term that we reach the record,” said Kymberly Martin, a market strategist in Wellington at Bank of New Zealand Ltd. “Interest-rate differentials and low volatility are currently both in favor of the New Zealand dollar.”