The Black Caps have missed a chance to pick up a confidence-boosting win over Australia in their final warm-up ahead of the World Twenty20 tournament in Bangladesh.
Chasing 201 for victory, New Zealand finished on 197 for nine from their 20 overs at the Khan Shaheb Osman Ali Stadium in Dhaka.
Martin Guptill made 62 off 34 balls at the top of the order, putting on 61 for the second wicket with captain Brendon McCullum (37 from 18 balls). However late wickets halted the New Zealand chase.
Corey Anderson (29 from 17) and Luke Ronchi (21 from 15) looked to put New Zealand in a winning position after joining at 137 for five in the 14th over to put on a partnership of 51 runs. Needing 17 off the final two overs both Anderson and Ronchi fell in the penultimate over before the Black Caps lost another two wickets in the 20th over to fall three runs short.
New Zealand managed just one boundary off the final 12 balls as Mitchell Starc (2-21) and Nathan Coulter-Nile (2-31) did the job at the death for Australia.
After winning the toss and batting first, Australian openers David Warner and Aaron Finch got off to a fine start putting on 113 for the opening wicket, including 24 runs off Kane Williamson's only over with the ball.
That started a run where the pair hit 83 off four overs including 23 off Ronnie Hira's opening over and then another 20 off Jimmy Neesham's first chance with the ball.
Eventually Warner (65) and Finch (47) took mercy on New Zealand an both retired out at the end of the eight over. Anton Devcich picked up New Zealand's first actual wicket two overs later when he trapped Glenn Maxwell LBW for two.
The big hitting didn't stop for Australia as Shane Watson hit three consecutive sixes off Hira before the spinner had him caught by Guptill for 27. Hira finished with 44 for one from two overs.
Kyle Mills picked up some late wickets to finish with 2-21, while Devcich impressed with 1-15 from three overs, but the early damage set up a strong platform for Australia to reach 200 for seven.
"We were chasing quite a big total of 200 and to get close is pretty pleasing but there is also that disappointment factor of next getting across the line when we should have," said Guptill.
"If we put more partnerships together and lose less wickets towards the end of the innings we are going to score big totals.
"It was a low skidding wicket and to score 197 runs chasing 200 was a pretty good effort and that will give us a lot of confidence going into the next game."
After the match both sides played a five over practise game, which Australia won in the third over of their innings.
The Black Caps open their World T20 campaign against England in Chittagong on Sunday morning NZT.