Dollar falls after Monetary Policy Statement

The New Zealand dollar fell in the wake of the Reserve Bank of New Zealand's Monetary Policy Statement (MPS) even though the official cash rate was held unchanged at a record low of 2.5 per cent.

The NZ dollar fell from around US70.80c to about US70.20c in reaction to the MPS.

"Then it sat for a while and then we had weaker-than-expected aussie employment data. The aussie dollar went down a bit on that and we followed," said Imre Speizer, currency strategist at Westpac.

The NZ dollar was at US69.80c by 5pm, down from US70.63c at the same time yesterday.

Mr Speizer said the MPS was actually hawkish overall but the market focused on the idea that higher lending costs had done some work for the central bank and it would not have to raise interest rates as much in the rate hike cycle when it occurs.

The bank is expected to start raising interest rates mid-year. Australia has already raised its official rate to 4 per cent.

Against the Australian dollar, the NZ dollar was A76.55c at 5pm, down from A77.07c at the same time yesterday.

The NZ dollar was at 63.00 yen from 63.55 yen at the same time yesterday and 0.5102 euro from 0.5190 euro yesterday.

The trade weighted index fell to 64.58 at 5pm from 65.26 at the same time yesterday.

- NZPA