27 Jan 2011

NZ dollar continues to rise

6:50 pm on 27 January 2011

The New Zealand dollar has continued to gain after a better-than-expected assessment of the economy from the Reserve Bank.

The dollar gained nearly 1 cent against its US counterpart and was trading over US77 cents after the Official Cash Rate was left unchanged at 3% on Thursday morning.

The decision to keep the cash rate on hold for the fourth consecutive time came as no surprise to the markets.

What did take them by surprise was the upbeat statement accompanying the Reserve Bank's decision.

It referred to signs of stabilisation in the housing market, as well as strong business confidence, investment and exports.

BNZ currency strategist Mike Jones says currency traders had been anticipating a more downbeat statement after recent weak data.

Mr Jones says the potential for interest rates in New Zealand to move further ahead of those in America increased after comments from its central bank.

That helped to push up the New Zealand currency further against the US dollar.