Kiwi dollar surges up through 70 US cents

The NZ dollar has surged higher, breaking and holding above the 70 US cent barrier in overnight trade. It has not held at this level since August 29, 2008 when it was 70.3 US cents. At that time, it was retreating from its post-float high of 81.76 US cents in March 2008. The Kiwi did hit 70 USc on the early morning of September 10, but this was only briefly. The Kiwi dollar fell from above 80 US cents in mid 2008 to below 50 USc as late as March this year. However, as investors' risk appetite began to improve this year and as the US dollar weakened across the board, the Kiwi rose sharply in line with a rise in the US stock markets. The New Zealand dollar went free-floating in 1985. Prior to that, its level was defended by the Government as an instrument of monetary policy. This process became thoroughly discredited during the "Muldoon-era". In January 1975, NZ$1 purchased US$1.32, but it fell below parity in September 1979. After a period of "managed declines" or mini-devaluations, all in support of the export sector, it suddenly fell below today's level in a bigger official devaluation in March 1983. After the change of government and defeat of Prime Minister Muldoon in July 1984, it fell below 50 US cents for the first time. Earlier this week, the Kiwi hit the 42 British pence mark and and is now 64.2 on the Trade Weighted Index (TWI), which measures the New Zealand dollar against a basket of currencies. It has not been at this level since September 2008. The TWI's high point was 76.88 in July 2007. We now also include the Chinese Yuan in our interactive exchange rate charts below.