The New Zealand dollar gained half a cent against the US dollar on Wednesday and is also higher against the currencies of the country's other major trading partners.
Bancorp Treasury Services senior client advisor Peter Cavanaugh said the New Zealand dollar had been the world's second-best performing currency this week, behind only Brazil's, which was benefiting from that country hosting football's World Cup.
The strong New Zealand dollar stemmed from the European Central Bank's actions in cutting its benchmark interest rate from 0.25 percent to 0.15 percent.
It also reduced its deposit rate for banks from 0 to -0.1 percent, effectively charging banks to deposit cash at the central bank, which it hopes will encourage them to lend to businesses rather than hold on to money.
"(That) has caused the world to start looking afield for high-yielding currencies," Mr Cavanaugh said.
"At the moment, New Zealand offers very attractive and high yields, a solid credit rating and the expectation is that our cash rate will be even higher tomorrow morning, so we offer the world everything they want and we're starting to see some investment flows into the currency."
Just after 5pm, the New Zealand dollar was buying: 85.49 US cents, 91.06 Australian cents, 51.01 pence, 0.6317 euro, 87.42 yen and 5.32 renminbi.
Shares little changed
New Zealand shares were little changed, as they've been all week, the NZX Top 50 Index ending steady at 5179 points.
Harbour Asset Management managing director Andrew Bascand said local shares were trading at more than 17 times forward earnings, well above the historical average of about 13 times.
"The New Zealand market has pushed up to valuation ratios that we haven't seen for several business cycles. It's a reflection of, I think, the outlook for growth, which is strong, and the outlook for earnings growth, which ought to be equally strong," Mr Bascand said.
"But at current prices, the market needs to be a bit patient and wait for that growth to come through in both the economy and earnings.
"We've got to consider that from time to time, the market will march sideways while it's waiting for that growth to come to fruition.
"My view is that it's not always the case that these valuations signal danger but they do make investors more alert to the need for companies to put runs on the board."
Shares in Fisher & Paykel Healthcare rose 8 cents to $4.75, while Air New Zealand shares gained 4 cents to $2.23 on strong volume of nearly 7.4 million shares.
