At 8am yesterday, the NZ dollar opened local trading at US77.97c and continued to rise, reaching US78.12c by mid-morning and closing local trading at US78.19c, US0.74c higher than Tuesday's close.
But ANZ economist Steve Edwards said it was a question of when, not if, the wider economy would benefit from surging commodity prices.
The renewed interest in the New Zealand dollar was in part due to the ANZ Commodity Price Index rising 3.8% in January, the fifth successive month of increases, to a record level on the back of improved values for 13 commodities, with three unchanged and just one, skins, falling.
There also appears to be some concern the political unrest in Egypt could spread while ASB expects little respite from a strong NZ-US exchange rate so long as the US Federal Reserve keeps interest rates at extremely low levels.
Dairy prices at Fonterra's GlobalDairyTrade auction on Tuesday night continued that commodity price appreciation, rising 7.2% compared to the previous sale two weeks earlier.
Anhydrous milk fat (AMF) prices over all contract rose by 9.2%, skim milk powder (SMP) by 8.5% and whole milk powder (WMP) 5.7%.
There was no butter milk powder offered.
The average price over all products was $5737 ($US4246), with AMF averaging $8764 ($US6486), SMP $5287 ($US3913) and WMP $5398 ($US3995).
Mr Edwards said the bank's commodity price index has made cumulative gains of 18% since August last year.
The ANZ index showed that in January SMP prices rose 14% compared to December, while WMP rose 7%.
An 11% lift in wool prices and 7% rise in beef, pushed values to their highest levels since the index began in 1986.
Other commodities to lift in price were aluminium, up 4%, venison 3%, lumber 2% and wood pulp, sheepmeat and seafood at 1%.
Logs, kiwifruit and apples were unchanged.
Skins fell 0.5% but this was off a 14-year high recorded in December.
Mr Edwards said stronger exchange rates dampened the effect of improving commodity prices when returns were translated into local currency, but the New Zealand dollar commodity price index rose 2.3% to reach a new high in January.
ASB rural economist James Shortall said recent farm commodity price increases could be sustainable for the next couple of years even with an exchange rate expected to average in the mid $US75 range.
He said Fonterra could increase its forecast milk price from the current $6.90 a kg of milk solids while global shortages of sheep meat and beef would underpin recent price rises.
The average lamb price has hit $105, $20 a head more than early forecasts, while US imported beef prices are at record levels at over $US2 a pound.
Further increases in milk prices would be driven by rising demand for dairy products in growth economies such as China and oil-rich economies, rising stock feed prices would quell any production increases from intensive farming systems and weather extremes in the first half of the season have impacted on milk production.
