The New Zealand dollar was little changed after Chinese inflation figures raised fears the world's second biggest economy may slow down.

The kiwi was unchanged at 78.03 US cents at 5pm from 78.01 cents at 8am, and was up from 77.26 cents on Monday. The trade-weighted index gained to 74.69 from 74.21 on Monday.

China's consumer price index rose 2.7 per cent in the second quarter from the same period a year earlier, according to the National Bureau of Statistics. The figure was more than the expected pace of 2.5 per cent, sparking fears the central bank may hike interest rates to cool activity.

That tempered any push higher as a sell-off of the Kiwi in recent months looked to have run out of steam.

"If China has higher than desirable inflation, it will have to tighten monetary policy and if it tightens, economic growth will slow down," said Michael Johnston, a senior trader at HiFX in Auckland.

"We may have a short pop higher in the Kiwi, and any decent rallies will see importers sell into it."

Johnston said the currency may touch 78.50 cents in the near-term, but is still in a long-term trend lower as investors support the greenback on the prospect of the US Federal Reserve winding back its stimulus programme.

Local business confidence held at a three-year high in the June quarter, according to the New Zealand Institute of Economic Research's quarterly survey of business opinion, even though firms reported a slowdown in their own activity.

Official figures also showed consumer spending on electronic cards rose more than expected, while property values also rose to a new record at an annual pace of 7.6 per cent.

New Zealand's bubbling property market has been a concern of the central bank, and traders are becoming increasingly bullish in their expectations of an early rate hike.

The local currency gained to 85.49 Australian cents from 85.39 cents on Monday, and advanced to 78.55 yen from 78.22 yen. It increased to 60.64 euro cents from 60.29 cents and gained to 52.23 British pence from 51.94 pence.


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