Dollar gains ground on Aussie rate hike

The New Zealand dollar gained ground towards the end of the day today as Australia's central bank hiked its official cash rate.

The kiwi was today treading water in a US71.20c to US71.70c range ahead of the Reserve Bank of Australia's (RBA) rate announcement at 4.30pm, which saw it raise the cash rate from 3.5 per cent to 3.75 per cent as it said the global economy had resumed its growth.

The rate rise, the third hike in as many months, was expected.

It saw the kiwi gain ground to US71.80c but the spike was more marked against the aussie dollar as it rose to A78.50c from A78.10c, to reverse what had been a slow slide during the day.

At 5pm the kiwi was worth A78.51c, on a par with yesterday's 5pm value of A78.49c.

The spike was the result of a lack of conviction in the RBA's statement, and the Australian dollar drifted lower against other currencies, said BNZ currency strategist Danica Hampton.

Otherwise the NZ dollar was "a little bit sleepy" against other currencies, she said.

The kiwi ended the day down against US dollar, to US71.80c from US72.11c at 5pm yesterday.

It was little changed against the euro, worth 0.4782 from 0.4784 yesterday.

It dropped against the Japanese yen, to 61.59 from 62.47 yesterday and gained against the British pound, to 43.67p from 43.48p yesterday.

The trade weighted index dipped slightly to 63.88 from 63.92.

- NZPA