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Kiwi hits three-month high against Oz

NZ NewswireNZ Newswire 19/05/2016 Tina Morrison

The New Zealand dollar has touched a three-month high against the Australian dollar as investors favoured the higher returns available on this side of the Tasman.

The kiwi hit 93.86 Australian cents and was trading at A93.31c at 8am on Friday in Wellington, from A93.42c at 5pm on Thursday.

The local currency edged up to US67.42c from US67.31c.

Investors are favouring the kiwi over the Aussie to take advantage of New Zealand's higher relative interest rates. Australia's central bank cut its benchmark interest rate a quarter point to 1.75 per cent this month, while New Zealand's central bank held its rate at 2.25 per cent at last month's meeting.

That's propelled the kiwi higher, approaching a key technical level of A94c, which could see it break higher still, hurting the competitiveness of exporters to New Zealand's second-largest market.

"The kiwi/Aussie looks like it wants to go higher," said Derek Rankin, a director at Rankin Treasury Advisory.

"Interest rates are higher in New Zealand than they are in Australia. If you are actually looking to invest in this part of the world, the base rate for Australia is being lowered down to 1.75 and the base rate for New Zealand is at 2.25 so you can get a half a per cent more."

In New Zealand on Friday, April data for migration, tourism and credit spending is released.

In the morning, the kiwi advanced to 60.21 euro cents from 60.01c and gained to 4.4120 yuan from 4.4036 yuan. It was little changed at 46.19 British pence from 46.17p, and at 74.11 yen from 74.07 yen. The trade-weighted index rose to 72.63 from 72.55.

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