The New Zealand dollar has soared following the Reserve Bank's decision on Thursday to keep the official cash rate (OCR) on hold.
The Kiwi was trading at 71.26 US cents at 6am this morning, compared to 70.15 ahead of the 9am announcement yesterday.
At one point yesterday it reached a 12-month high of 71.46 US cents.
The currency has risen more than two percent against the Australian dollar, trading at just under 96 Australian cents. The dollar is at its highest against the Australian currency since May of last year.
The Kiwi is trading at almost two percent higher against the pound at 49.31 pence. It is up just over two percent to 62.98 Euro cents.
Most local analysts expected the Reserve Bank to keep the OCR at 2.25 percent. But the decision appeared to catch some offshore investors by surprise.
They believed a rate cut was warranted due to the strength of the New Zealand dollar and the fact that inflation is well below the RBNZ's target range of two percent.
RBNZ Governor Graeme Wheeler said yesterday the currency is too high.
But a bigger concern for him right now is that any cut to interest rates could fuel an already hot property market.
So the Bank is opting to wait for fresh data here in New Zealand and from offshore. The RBNZ will also want to see what other central banks do with their interest rate settings.
The RBNZ signalled that it is looking at another potential cut. Some economists believe that could come in August, but others say there is now some doubt about whether the OCR will go any lower.
The RBNZ also signalled yesterday that there could be a toughening up of the loan-to-value-ratio controls for property investors. The Bank is worried about the potential for a property slump, which could result in a rise in people defaulting on their mortgages.
Investors in the Auckland market need a deposit of at least 30 percent. That requirement could be stepped up even further, or the RBNZ might introduce the controls for investors outside of Auckland.
Property investors account for almost 50 percent of house sales in Auckland and around 40 percent nationally.
The Bank is also looking at introducing debt-to-income controls.Newshub.