The New Zealand Dollar (Kiwi) is still rallying against the world’s major currencies, due primarily to the country’s interest rate climate. Yesterday, I reported that that the carry trade is driving the Yen downwards, as investors short the Japanese currency in favor of higher yielding alternatives. On the other side of the carry trade stands the Kiwi, which is being driven higher by investors in search of yield. In addition, since New Zealand inflation is currently tracking near the top end of the Central Bank’s comfort zone, another rate hike may be in the cards, which would push New Zealand’s base rate to 7.5%. Bloomberg News reports:

There is a 44 percent likelihood of a quarter-point rise in New Zealand’s official cash rate on Dec. 7, when the central bank next reviews borrowing costs, according to an indicator calculated by Credit Suisse, based on trading in overnight interest-rate swaps.

Read More: New Zealand Dollar Rises to Seven-Month High on Rates Outlook