More highs in prospect for fast-climbing NZ currency

THE New Zealand dollar rose to a five-month high against the US dollar as the country's high interest rates attracted investors.

New Zealand 90-day bank bills, the key indicator of the central bank's interest-rate policy, last yielded 8.65 per cent. That compares with a 5.5 per cent yield for three-month Eurodollar deposits and 0.625 per cent for three-month Euroyen deposits.

The New Zealand dollar was quoted at 66.56 US cents, up from 66.34 cents late on Thursday in New York. Earlier, the New Zealand currency reached 66.59 cents, its highest level since August 8, when it reached 67 cents.

The trade-weighted New Zealand dollar index, watched closely by the central bank, rose as high as 64.32.

A government report released on Wednesday showed consumer prices rose a higher-than-expected 2.9 per cent last year. The Reserve Bank of New Zealand has said that interest rates must remain high and the trade-weighted index must appreciate by 1.7 per cent annually until the inflation rate is under control.

The New Zealand dollar could rise to 67 US cents this week, one analyst said.