File path is missing from parameters. Try:

my $dir = "kennel";
opendir(DIR,$dir) or die "Cannot read $dir\n";
while ($file = readdir(DIR)) {
    next unless $file =~ /cat/;
    my $newfile = $file;
    $newfile =~ s/cat/dog/;
    rename("$dir/$file", "$dir/$newfile") || print "Don't have permiss
+ion to rename.\n";
}
closedir(DIR);
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