New Zealand dollar hits fresh high against pound
The New Zealand dollar has surged to a new post-float high against the British pound.
The kiwi was sitting at 56.40 British pence at 6am. That surpasses the level of 56.1 pence it reached back in April 2013.
The pound has fallen on global markets due to the uncertainty about the economic effects of Britain's decision to leave the European Union. The New Zealand dollar gained 4.37 percent last week against the British currency.
The kiwi is also making fresh gains against other major currencies, as some traders bet the Reserve Bank will keep the Official Cash Rate (OCR) on hold next month.
It was trading at 73.07 US cents at 6am, a rise of almost two percent from a week ago.
The kiwi has risen to 96.42 Australian cents, for a one week gain of 0.90 percent.
Some traders had expected that last Thursday the Deputy Governor of the Reserve Bank Grant Spencer would announce a new policy to limit lending to property investors and potentially other home buyers. Instead Mr Spencer signalled changes would be introduced towards the end of the year.
That has left the markets thinking there is now less chance of a cut to the OCR next month.
Craigs Investment Partners says that the market is now pricing in a 42 percent chance of a rate cut, compared to 55 percent a week ago.
The rising dollar puts the Reserve Bank in a tricky position.
The Trade Weighted Index (a basket of the currencies of New Zealand's major trading partners) is now 7.3 percent stronger than the Reserve Bank expected it would be at the end of June.
New Zealand's relatively high interest rates and strong sharemarket make New Zealand an attractive destination for offshore investors.
A high dollar would usually add to the argument for a rate cut. But any cut to the OCR risks fuelling the already hot property market.
The kiwi also received a boost against the Australian dollar on Thursday after ratings agency Standard & Poor's decided to downgrade Australia's rating outlook to negative from stable.
The kiwi had been trading at 94.80 Australian cents on Thursday morning prior to the announcement by S&P and the speech by Mr Spencer.