The New Zealand dollar fell after local firms dialled down their inflation expectations as economic growth slows from its rampant pace at the start of the year, and as US gross domestic product figures loom.

The kiwi dropped to 78.19 US cents at 5pm in Wellington from 78.58 cents at 8am and 78.90 cents yesterday. The trade-weighted index declined to xx from 78.60 yesterday.

New Zealand firms cut their one-year ahead inflation expectations by about 40 basis points to 1.59 percent in the September quarter, and have trimmed their forecasts for local economic growth, according to the Reserve Bank's survey of expectations. The lower forecast may make it easier for the central bank to delay future rate hikes, which are already being questioned as official data shows tepid inflation in the economy.

That comes ahead of the US GDP figures, which will help investors firm up their expectations for the Federal Reserve's shift away from running zero interest policy as the world's biggest economy recovers from the global financial crisis.

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"Inflation expectations were lower, and US GDP tonight will direct direction as it gives us an idea of whether the US is raising interest rates any time next year," said Nick Tvedt, senior FX dealer at NZForex in Auckland. "The kiwi's back down to the bottom of the range."

Tvedt said the next big target is 78.07 US cents, and the kiwi could push below that if the US economic figures support higher interest rates.

The kiwi fell to 92.10 yen at 5pm from 93 yen yesterday after Bank of Japan governor Haruhiko Kuroda said his nation's inflation is on target to reach the 2 percent target. The yen rallied on the news, and sapped demand for the Australian and New Zealand dollars, which had previously been beneficiaries of the currency's weakness.

The local currency rose to 91.10 Australian cents from 90.83 cents yesterday, and dropped to 62.92 euro cents from 63.65 cents. It declined to 49.87 British pence from 50.38c.