Wellington, Dec 23 NZPA - The New Zealand dollar fell on news the economy is crawling its way out of recession.

The 0.2 percent rise in gross domestic product in the September quarter was less than the 0.3 percent rise the market was expecting and the 0.4 percent rise the Reserve Bank of New Zealand predicted in its December monetary policy statement.

The NZ dollar fell to US69.80c by early afternoon, its lowest level since mid September, from around US70.20c before the data.

The weaker figure implied that the RBNZ will not be under pressure to hike interest rates, a move which would attract investors to the currency.

"We see June 2010 as still the central case for when the tightening cycle starts. There is simply not sufficient data to warrant hiking as early as March," ANZ Bank economists said in a commentary.

ASB Bank argued that revisions of quarterly growth rates since 2006 implied New Zealand had a lower rate of non-inflationary growth, suggesting the central bank should act in April to increase its official cash rate.

Goldman Sachs JBWere economist Bernard Doyle said the economy was crawling, rather than springing out of recession.

The weaker GDP data comes after better than expected current account data yesterday but economists dismissed yesterday's data as unsustainable and a product of a weak economy.

The NZ dollar traded as low as US70.01c in Tuesday night when the US dollar hit a two-month high against the yen.

The US dollar has been strong lately as investors who previously sold bought back positions before the end of the year.

By early afternoon the NZ dollar was at A79.74c, down from A80.07c at 5pm yesterday.

It was at 0.4901 from 0.4919 and 64.14 yen from 64.25. The trade weighted index was at 64.27 from 64.53 at 5pm yesterday.