The New Zealand dollar held above 82 US cents after Prime Minister John Key tried to talk it lower, calling the currency "overvalued", even as the country's economic growth looks set to outpace the UK, the European Union, the US and Japan this year.

The New Zealand dollar was virtually unchanged at 82.01 US cents at 8am from 82 cents yesterday at 5pm. The trade weighted index decreased to 73.12 from 73.29

Traders largely ignored the Prime Minister's jawboning, after Key said "we're considering what we can do to resist a rising exchange rate" and "kiwi strength was the result of weakness in US and European economies." He is on a trade mission in Jakarta, Indonesia, and was speaking at the Association of Southeast Asian Nations headquarter. The kiwi has gained 5.4 per cent against the greenback so far this year.

"Suggestions from Prime Minister Key that the currency is overvalued knocked some steam out of the New Zealand dollar last night," said Mike Jones, market strategist at Bank of New Zealand. "There is very little the government can do to lean against the strong New Zealand dollar - this is something Key himself noted overnight."


In March, Reserve Bank Governor Alan Bollard said the high kiwi dollar was reducing the need for him to hike rates from a record-low 2.5 per cent.

The New Zealand dollar fell to 62.43 euro cents from 62.91 cents after the yield on Spanish 10-year government bonds fell from an intra-day high 6.16 per cent on reports euro-zone members may intervene as soon next month.

Spanish Prime Minister Mariano Rajoy has been struggling to convince investors he can get the country's finances under control after failing to meet deficit targets set by the European Commission and the previous government.

Spain is set to sell two- and 10-year bonds on Thursday, while Germany is also preparing to sell debt this week.

In the US, the world's largest economy, data was mixed with a report showing retail sales rose 0.8 per cent in March. Economists had predicted a 0.3 per cent increase. Separate reports indicated that manufacturing in the New York region grew at the slowest pace in five months in April, while confidence among homebuilders dropped.

"The sideways trend in the kiwi dollar masks what was a weak performance overnight," Jones said. "The kiwi was the only currency that didn't benefit from a weaker US dollar."

The Reserve Bank of Australia will release the minutes from its March meeting today after the central bank held its target cash rate at 4.25 per cent. The Bank of England will release the minutes from its March meeting on Wednesday.

There is no significant data set for release in New Zealand today. Fonterra will hold an auction on its GlobalDairyTrade today in the US.

The New Zealand dollar fell to 79.21 Australian cents at 8am from 79.39 cents yesterday. The kiwi slipped to 51.58 British pence from 51.71 pence yesterday and 65.98 yen from 66.16 yen.