4 Feb 2013

Kiwi rises to two-and-a-half-year high against Aussie dollar

7:00 pm on 4 February 2013

The New Zealand dollar has risen to a two-and-a-half-year high against the Australian dollar before the Reserve Bank of Australia's monetary policy review.

The Kiwi rose as high as 81.39 Australian cents, the highest since July 2010, and traded at 81.10 Australian cents at 5pm on Friday in New York.

The NZ currency traded at 84.56 US cents at 5pm from 84.53 cents last week.

Australia's Reserve Bank is expected to keep the target cash rate at 3% when the board reviews the benchmark rate on Tuesday.

AAP reports that comes ahead of new forecasts, which may initiate a future cut if the projections show the world's 12th biggest economy is slowing down.

Commonwealth Bank of Australia currency strategist Peter Dragicevich said that cross-rate is very interest rate sensitive.

"Expectations the RBA could do further policy easing will help the Kiwi to outperform the Aussie in the near-term."

The RBA's cash rate is 50 basis points higher than New Zealand's benchmark interest rate.