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This could be the hottest currency trade of 2014

The enjoyed a strong 2013, and its fortunes are expected to be even brighter this year, analysts say.

The Kiwi – as it is broadly referred to by FX traders – has notched up around 6 percent of gains against the greenback since late June, as rhetoric from its central bank turned increasingly hawkish.

(Read more: Rate hike talk boosts New Zealand dollar)

Mark Coote | Bloomberg | Getty Images

In 2013, the currency fared particularly well against the Japanese yen, gaining 20 percent, while the Aussie-Kiwi cross touched its weakest level in five years last month, as the Aussie dropped 14 percent against the greenback in 2013.

According to Kathy Lien, managing director of BK Asset Management, New Zealand stands out from other major western economies.

"The Reserve Bank of New Zealand will be the only major central bank raising interest rates [in 2014] and this unique position makes the New Zealand dollar one of our favorite trades for 2014," she said.

(Read more: Markets focus on rupee, rupiah… and the kiwi?)

According to Lien, there will be three major drivers for investors in the Kiwi in 2014: expectations for strong economic growth, the expected rate hike, and increased demand for soft over hard commodities – New Zealand's major export.

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