The New Zealand dollar firmed after the central bank kept rates on hold as expected and indicated that more easing was likely to be necessary.

The kiwi was trading at 65.52 US cents at 5pm in Wellington from 66.44 US cents at 7:50am in Wellington. The trade-weighted index was at 72.72 from 72.55.

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The kiwi lifted slightly after the central bank kept rates on hold at 1.5 per cent and said a lower OCR may be needed over time "given the weaker global economic outlook and the risk of ongoing subdued domestic growth."

Kiwibank dealer Mike Shirley said the kiwi did see some volatility right after the announcement as investors "attempted to piece together the intent from the statement and the minutes."

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He noted the official statement was arguably not as dovish as the monetary policy committee's record of meeting, which was also published. While the statement said a lower official cash rate may be needed, the record of meeting said the members agreed that "more support from monetary policy was likely to be necessary."

He noted, however, that a rate cut in August is still expected and "the dust settled and we're basically at the level we saw at the open this morning."

Investor focus will now shift to the upcoming G20 meeting where trade talks between US President Donald Trump and China's President Xi Jinping are expected to dominate. While markets will be hoping for an easing of trade tensions between the two nations, Shirley said that even if the two agree on something "there's a lot of wood to be chopped before that will translate into something tangible."

The kiwi was trading at 95.51 Australian cents from 95.43. It was at 52.49 British pence from 52.31, at 58.56 euro cents from 58.42, at 71.49 yen from 71.17, and at 4.5826 Chinese yuan from 4.5691.

The New Zealand two-year swap rate was at 1.3118 per cent from 1.2951 late yesterday, while the 10-year swap rate was unchanged at 1.7375 per cent.