The upward pressure to push the kiwi to US70c and beyond appears to be gaining momentum with fledgling signs of a global economic recovery.
The US dollar's strength had lain in its "safe haven" status for risk-averse investors, but increasingly positive news from US markets and companies and some turnaround towards a global economic recovery had put higher-risk currencies back in investors' favour.
ASB economist Chris Tennent-Brown said yesterday's 1c rise in the kiwi to more than US66c was near forecast expectations.
"The pressure is there pushing the kiwi towards US70c by the end of the year, and even higher into 2010," he said.
He highlighted that despite a potential rating agency downgrade last week, which should have undermined the kiwi's strength, it had since risen, in response to international news and trends.
While the higher kiwi represents increasing pressure on New Zealand exporters, further undercutting profit margins in foreign exchange dealings, Mr Tennent-Brown highlighted that all economies were wanting lower respective currencies in order "to get their exports out" at more favourable foreign exchange terms.
"Our exporters are struggling, but they are not getting as smashed about as other economies; Asian countries are especially hard hit. New Zealand is doing better than most," Mr Tennent-Brown said.
In June, Japanese exports were down 35.7% on levels a year ago and Chinese exports were down 21% while in May, US exports were down 21% on year ago.
While some comparison months for New Zealand exports have also been down, in May they were up 5.8% on levels a year ago.
"Some [New Zealand] months have been down on year-ago levels, but nowhere near the magnitude seen in many economies," Mr Tennent-Brown said.
Similarly, in another comparison, New Zealand's 5% unemployment rate was "relatively good" when compared with the United States rate of 9.5%, Eurozone 9.5%, UK 7.6%, Canada 8.6% or Australia's 5.8% rate, he said.
ABN Amro Craigs broker Chris Timms said investor sentiment was turning, especially with a more positive financial reporting season in the US than was expected, and investors were again looking for returns from riskier currencies, such as the kiwi, Australian dollar and Asian currencies.
"In the short term, we can't see any relief in sight for the New Zealand dollar, because positive news on the worldwide economy will just put more upward pressure on the kiwi," Mr Timms said.
The currencies were offering higher returns and buying the kiwi could also be used for purchasing New Zealand shares, he said.
