The New Zealand dollar pared gains from a relatively optimistic Reserve Bank review on Thursday after rating agency Standard & Poor's said the slowing resources sector was weighing on the Australian economy.

The kiwi dollar rose to 83.47 US cents at 5pm in Wellington from 83.11 cents just before the RBNZ announcement. But was down from as high as 83.67 cents on Thursday, when the S&P report rubbed off on the kiwi, and 83.71 Wednesday.

The kiwi climbed to 80.31 Australian cents from 79.94 cents on Wednesday.

Central bank governor Graeme Wheeler held the official cash rate at 2.5 per cent as expected, flagging a recovery in New Zealand's economy over the coming year and a reduction in spare capacity which will increase inflation.

The local currency rallied on the news, even after Mr Wheeler called it overvalued and Reserve Bank figures showed the bank had started selling down its New Zealand dollar holdings.

"The statement was more hawkish than many were expecting - reading between the lines the bank is pretty happy with the recovery playing out," said Mike Jones, currency strategist at Bank of New Zealand."

The kiwi fell to 75.87 yen at 5pm in Wellington from 76.04 yen on Wednesday, and increased to 61.50 euro cents from 61.29 cents.

The trade-weighted index declined to 75.06 from 75.29.