The New Zealand dollar jumped more than 1 US cent after Reserve Bank governor Graeme Wheeler kept interest rates on hold and reiterated that future moves in rates could be "up or down", surprising traders who expected him to drop a reference to rates potentially moving higher.

The kiwi rose as high as 73.05 US cents, from 71.84 cents before the Reserve Bank monetary policy statement at 9am. It was recently trading at 72.94 US cents.

While Wheeler lowered the track for the 90-day bank bill rate, seen as a proxy for interest rates, he repeated previous comments that future interest rate moves could be either up or down, depending on economic data. That surprised some traders, who had short positions heading into the meeting, expecting that the kiwi could fall on more dovish comments.

Wheeler said the currency was still "unjustifiably high and unsustainable" and that "a substantial downward correction in the real exchange rate was needed to put New Zealand's external accounts on a more sustainable footing." He declined to comment on whether currency markets had misinterpreted the monetary policy statement.

"The majority of his speech is quite hawkish compared to what the market would have thought," said Tim Kelleher, ASB Bank head of institutional FX sales in New Zealand. "He basically said 'up or down' so that's why the kiwi jumped. People thought he might have dropped the 'up' bit. He should have just put 'on hold'.

"I just don't see how anyone can realistically justify that New Zealand could raise rates."

Wheeler's hawkish tone wasn't consistent with expectations that the currency should fall, Kelleher said.

"He doesn't do himself any favours."

The currency could appreciate back to 73.50 US cents, Kelleher said.