WELLINGTON: The New Zealand dollar edged higher on Thursday despite a forecast deterioration in New Zealand's government accounts, as the US dollar remained weak after the Federal Reserve's massive rate cut. Kiwi consolidates just below a five-week high of $0.5954 struck in offshore trade, as the U.S. dollar remained pressured in the wake of Federal Reserve's rate cut. The U.S. dollar dips to a 13-year low against the yen and a two-and-a-half month low against the euro as the Fed's move reduced the greenback's yield appeal. * NZ dollar just off recent highs against the Aussie, the euro and the yen. NZ dollar trade weighted index at a three-week high. * NZ dollar seen as likely to struggle to attain and hold $0.6000 level, with investor caution over weak global outlook going into the year-end holiday period. * NZ Treasury presents new economic and fiscal forecasts showing further sharp deterioration of the government's financial position. The government is predicted to post higher deficits and borrow significantly more to get through the slowdown over the next three to five years. Finance Minister Bill English says the government will pump around NZ$9 billion into economy over the next two years to stimulate the economy. He says the government will not allow debt levels and deficits to rise out of control. National Bank of NZ monthly business sentiment survey due at 0200 GMT, with expectations for some improvement in the headline measure and for indicators of businesses' own activity from November's sharp decline. NZ government bonds give up early gains and spread with offshore counterparts widen, while U.S. Treasuries rally. NZ Debt Management Office says borrowing programme for year to June 30, 2009 to be enlarged by NZ$500 million to NZ$4 billion. Forecasts bigger borrowing in future. Says to move to weekly bond tenders and looking at setting a new long bond.

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