Kiwi dollar leaps half a cent against Aussie

The New Zealand dollar failed to make ground against the US dollar today, but leapt against the Australian dollar near the end of the session after the Reserve Bank of Australia unexpectedly kept interest rates on hold.

The kiwi had taken a hit earlier after further signs of a soggy economy emerged this morning, in the New Zealand Institute of Economic Research's quarterly business opinion survey.

Businesses turned pessimistic in the September quarter after a year of sustained optimism, pointing to little or no economic growth in the second half of the year.

The survey also showed the economy contracted in the September quarter after stalling in June.

Seasonally adjusted, a net 9 per cent of firms were pessimistic about the general business situation, compared to a net 26 per cent of optimists in the June survey.

By 5pm, the kiwi was at US73.93c, down from US74.26c at the same time yesterday.

The kiwi was at A77.10c not long after the RBA decision, up from yesterday's A76.65c.

There had been increasing expectations the RBA would raise the benchmark rate to 4.75 per cent from 4.5 per cent, on the back of recent hawkish comments from the central bank and strength in the economy.

The aussie lost around US1c after the announcement, although the bank gave indications that further rate rises were on the horizon.

The kiwi was at slightly higher against the euro at 0.5417, but weaker against sterling and the yen at 46.73p and 61.71 respectively.

There was little change on the trade weighted index, which was at 66.56 from 66.63 yesterday.

The Japanese yen remained near a 15-year high against the US dollar as investors waited to see what the Bank of Japan would do to rein in the currency.

- NZPA