NZ dollar gains after RBA policy review

The New Zealand dollar rose after minutes from the Reserve Bank of Australia's last policy review showed its decision to cut rates was "finely balanced" and ahead of the Federal Reserve's meeting later this week.

The kiwi rose to 31 US cents at 5pm from 79.20 cents just before 8am and 79.29 cents.

The trade weighted index increased to 71.63 from 71.47.

The RBA's decision to cut a quarter-point from the target cash rate to 3.5 per cent this month was a "finely balanced" one, and helped limit the impact of the deteriorating situation in Europe, according to the minutes from the bank's meeting.

That comes ahead of the Federal Open Market Committee's meeting on Wednesday in Washington, where markets are expecting the US central bank to stimulate the world's biggest economy further.

"It could just be an Operation Twist extension, but it could be bond purchases as well, so I wouldn't be shorting currencies at the moment," said Imre Speizer, market strategist at Westpac Banking.

New Zealand's currency held near a five-week high after leaders at the Group of 20 nations summit in Mexico stepped up pressure on German Chancellor Angela Merkel to relax her stance on deep budget cuts for countries that need bailing out including Greece which gave two pro-austerity parties a slender majority in Parliament.

Traders will be watching Fonterra Cooperative Group's online trading auction on Tuesday in the US, which will likely show a small improvement in local dairy prices.

The New Zealand dollar rose to 62.87 euro cents from 62.19 cents, and increased to 50.55 pence from 50.45 pence.

It slipped to 78.22 Australian cents from 78.32 cents, and was little changed at 62.67 yen from 62.72 yen.

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