New Zealand dollar climbs, hailed as 'top-performing major currency'

The New Zealand dollar's been getting glowing reviews in the international press as the "top performing major currency" over the past few days. 

New Zealand's currency has gained ground recently, rising in value to 94 cents against the Australian dollar and was also up to 63 cents against the US dollar, after plummeting to 56 cents in October.

"It's probably taken a little bit of inflationary heat out of the system," economist Cameron Bagrie said of the strengthening New Zealand dollar. "We've got the winners out of this being the consumer side of the ledger and travellers overseas - it makes things a little bit cheaper."

The UK pound also slipped against the New Zealand dollar to 51.83 pence on Monday - not quite as low as October when it touched 49 pence after the British government unveiled plans for large unfunded tax cuts.  

But it's not all good news, with the strong New Zealand dollar causing Kiwi export prices to fall 9 percent in November.

In addition, the Organisation for Economic Co-operation and Development (OECD) predicted New Zealand's economy would only grow by 1 percent next year after expanding by 2.1 percent in 2022.  

A large part of the rally in the New Zealand dollar has been driven by a more hawkish Reserve Bank (RBNZ), with red-hot inflation dashing hopes it might slow down on its aggressive interest rate hikes. 

Rising interest rates were attracting foreign investment, leading to an appreciating New Zealand dollar. 

Bagrie told AM he expected the New Zealand dollar to remain at about what it is now against the US dollar in the coming years and also expected it to drop against the Australian dollar.

"Kiwi-Aussie dollar, for instance, up around 93-94 cents is overheated - the really expensive zone - for where the Kiwi-Aussie dollar should be.

"NZ dollar-US dollar's probably not too far away from where I think it's going to average for the next 10 years but, for the past 10 to 20 years, it's been up in the 70s."