Last week was a surprisingly successful week for the NZ dollar, which was second only to the euro in the major currency order of merit. The surprises came in two forms. The first was the way the Kiwi and the other commodity-oriented currencies seemed totally to ignore the continuing downward pressure on commodity prices. On the day it was reported that the Bloomberg commodity index had fallen to a 13-year low the antipodeans actually went up against sterling.

The second surprise was that when the Reserve Bank of New Zealand cut its benchmark interest rate from 3.25% to 3% the Kiwi strengthened. The reason seemed to be that the RBNZ had toned down substantially its complaint that the Kiwi is too strong. Over the seven days the overall effect was to send the NZ dollar three and a quarter cents higher against sterling and a third of a cent higher against the US dollar.