The kiwi rose to 84.41 US cents at 5pm in Wellington from 84.15 cents at 8am and 84.13 cents on Wednesday.
The trade-weighted index advanced to 78.90 from 78.67 on Wednesday.
The New Zealand dollar arrested its slide this month as traders pared back expectations Reserve Bank governor Graeme Wheeler will lower his forecast track for interest rate hikes this year at next Thursday’s monetary policy review.
Traders started anticipating a slower pace of interest rate increases as dairy prices steadily declined this year, and local inflation stayed in check.
Traders are betting Mr Wheeler will hike the official cash rate 80 basis points over the coming 12 months, according to the Overnight Index Swap curve.
“The market is coming to their senses and realised they have overdone how much they think the Reserve Bank will downgrade the interest rate track next week,” said Imre Speizer, market strategist at Westpac Banking Corp in Auckland.
“There was a very large gap that opened up between the Reserve Bank’s latest forecast from March and where the market has priced it.”
Investors will be watching the European Central Bank policy meeting on Thursday in Brussels, where president Mario Draghi is expected to announce new measures to stimulate the European economy.
The kiwi gained to 62.04 euro cents at 5pm from 61.79 cents on Wednesday.
It also increased to 90.90 Australian cents from 90.73 cents and to 86.56 yen from 86.35 yen.