The New Zealand dollar was little changed, benefiting from ongoing US dollar weakness despite initially falling on weaker-than-expected domestic economic growth.

The kiwi dollar traded at 73.27 US cents as at 5pm in Wellington, unchanged from 8am and versus 73.39 cents late yesterday. The trade-weighted index slipped to 74.95 from 75.07 yesterday.

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The kiwi fell around a quarter of US cent early in the session on news that the economy expanded 0.6 per cent in the three months to December 31 versus an expected 0.8 per cent as unfavourable weather weighed on agricultural output.

"The currency market reacted to the weak headline number but when you dig into the details it is not a terrible story and now we are right back where we started," said senior macro strategist at ANZ Bank New Zealand Phil Borkin.


BNZ head of research Stephen Toplis said the dip was "of little concern" as "the economy remains in generally good nick supported, in particular, by ongoing strength in household spending, the services sector and strong terms of trade."

Borkin said the kiwi was also continuing to benefit from US dollar weakness on growing fears of a possible trade war. "Domestic events are certainly taking a back seat to global themes right now," he said.

Fears of a trade war intensified after U.S. President Donald Trump sought to impose fresh tariffs on China.

The kiwi would be hurt by an eventual trade war but for now, investors are shunning the greenback. "The US is becoming a bit more inward-looking and the world is saying in that environment US dollars aren't worth as much to me so the US dollar is under a bit of pressure," he said.

Separately, Mike Shirley, senior dealer, FX & Interest Rate Sales at KiwiBank said this week's successful Debt Management Office auction "is spurring a need for off-shore investors to buy NZD in order to fund their acquisitions," which is helping underpin the kiwi.

The DMO issued $2 billion of a 2029 bond via syndication on strong demand.

The kiwi traded at 93.01 Australian cents from 93.19 cents yesterday. The kiwi declined to 77.68 yen from 78.11 yen yesterday. It traded at 59.20 euro cents from 59.16 cents and traded at 52.39 British pence from 52.48 pence. The kiwi traded at 4.6237 yuan from 4.6342 yuan.

New Zealand's two-year swap rate lifted 2 basis point to 2.26 per cent and the 10-year swap rate fell 2 basis points to 3.19 per cent.