Kiwi dollar pipped in parity race

A drop in the Australian interest rate, from 2.25 per cent, was expected to lift the Kiwi dollar.

Psychologist says equality between transtasman nations can only be a good thing.

Close but no cigar. The New Zealand dollar fell against the Australian currency yesterday after the Reserve Bank across the Tasman kept its cash rate unchanged, delaying the prospect of parity between the two currencies.

By late in the trading day, the kiwi had fallen to A97.85c - down from A99.10c just before the Reserve Bank's 4.30pm announcement, and down from Monday's record A99.78c.

A drop in the Australian interest rate, from 2.25 per cent, was expected to lift the Kiwi dollar as our higher Reserve Bank rate of 3.5 per cent became more attractive to investors.

Tourism New Zealand Chief Executive Kevin Bowler said parity could affect how many Australians came here.

However: "While New Zealand is relatively more expensive for Australians than it was a couple of years ago, it still represents good value for Australian travellers compared to many overseas destinations or domestic travel within Australia."

Psychologist Chris Skellet said it was promising to see "one more index of disparity dissolve between the two countries".

"It's important that we assume equivalence between us rather than adopt a one up/one down perspective," he said. "No matter how Australians regard us, we need to adopt an unrelenting attitude of equality and respect towards our neighbours."

The Governor of the Reserve Bank of Australia, Glenn Stevens, made a statement yesterday broadly similar to what he said last month, reiterating that "further easing may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target".