Kiwi hits three-year high against US

THE New Zealand dollar has continued its rally, extending its three-year high against the greenback to almost US88 cents.

It rose to US87.94c early yesterday, pushing the trade-weighted index to a record high of 81.71 before the kiwi slipped to about US87.7c in afternoon trading.

The dollar is at its highest point against the greenback since August 2011, when it set a postfloat high of US88.4c.

Tim Kelleher, head of institutional foreign exchange sales at ASB, said the TWI record was significant as the Reserve Bank paid a lot of attention to that index, rather than just looking at the exchange rate with the US.

‘‘If the currency is too high, they could hold rates.’’

The kiwi’s recent momentum had been helped by revised figures showing the US economy performing worse than expected, he said, raising the prospect of the Federal Reserve delaying interest rate increases.

The US economy contracted by 2.9 per cent in the first quarter, a slump pinned mostly on bad weather.

‘‘That’s been revised down from 0.1 per cent to -1.7 per cent to -2.9 per cent,’’ Kelleher said.

‘‘They’ve had three cracks at it and the markets are going ‘it’s even worse than we initially thought’.’’

The dollar hit a one-year high against the euro, rising to €64.58c.