The New Zealand dollar ground higher against the greenback today, buoyed by yield differentials, although trading activity was muted with little in the way of developments to give the market a steer.

The kiwi recently traded at US79.25 cents, up from US78.89c at 8am, while on the Trade Weighted Index of major trading partners' currencies, it rose to 71.66 from 71.56.

The Reserve Bank's official cash rate announcement had little effect on the kiwi, with Governor Alan Bollard keeping the benchmark lending rate at the historically low level of 2.5 per cent.

That level still compares favourably with the US and Europe, where rates are hovering near zero, helping support the kiwi.

"The RNBZ, as expected, didn't do anything, and didn't even mention the currency," said Tim Kelleher, head of institutional FX sales at Westpac, who said he is picking the kiwi to fall in the near term and is "selling on the bounces".

On the crosses, the kiwi recently traded at 76.70 Australian cents, up from A76.47c at 8am, and it rose to 61.97 yen from 61.67 yen. The kiwi rose to 65.26 euro cents from 64.93 euro cents, and gained to 51.19 pence from 50.94 pence.

The kiwi may trade as high as US79.50c in the offshore session according to Kelleher, although the bounce looks very vulnerable to headline shocks.

- © Fairfax NZ News