Kiwi edges higher after RBNZ confirms rates on hold

BUSINESSDESK: The New Zealand dollar rose after Reserve Bank governor Alan Bollard left the official cash rate unchanged at a record-low and pointed to risks in Europe and a lower track for interest rates.

The New Zealand dollar rose to 77.48 US cents after the statement from 77.32 cents immediately before. It traded at 77.74 cents at 5pm.

The trade weighted index increased to 70.64 from 70.37.

Dr Bollard kept the official cash rate on hold at 2.5%, while trimming the forecast for the 90-day bank bill rate, often seen as a proxy for the OCR.

The rate will remain unchanged at 2.7%until June 2013, before peaking at 3.4% in March 2015. Dr Bollard had previously expected the rate to rise in December this year.

"The OCR came and went without much fanfare," said Dan Bell, currency strategist at HiFX. "Bollard left interest rates on hold but overall he was expected to soften the outlook."

"The kiwi firmed up after the announcement and we have ground higher throughout the day," he said.

New Zealand's monetary policy review comes as Greece prepares to go to the polls for the second time in six weeks on Sunday.

The result will be closely watched by markets in the event voters elect a government that decides to leave the region's shared currency.

The kiwi fell to 61.77 euro cents at 5pm from 62.15 cents yesterday.

The US, the world's largest economy, will release consumer price index and initial weekly jobless claims tomorrow.

The New Zealand dollar was little changed on 78.03 Australian cents from 78.05 cents yesterday.

The kiwi rose to 50.06 British pence from 49.89 pence. It was little changed on 61.74 yen from 61.79 yen.