The New Zealand dollar gained after the Reserve Bank's report on the strength of the nation's financial system reminded the market that the central bank is still in a tightening cycle, and will continue to lift interest rates when necessary.

The kiwi rose to 78.24 US cents at 5pm in Wellington from 78.09 cents at 8am and 77.48 cents yesterday. The trade-weighted index advanced to 77.49 from 76.87 yesterday.

The Reserve Bank's six-monthly financial stability report showed the regulator plans to keep restrictions on low-equity home loans to prevent house price inflation from blowing out again, particularly in light of the nations' strong inbound migration. Governor Graeme Wheeler told Parliament's finance and expenditure select committee that monetary policy settings are still "stimulatory" and that a more neutral level for the 90-day bank bill rate is around 4.5 percent.

"He reminded people that we're still in a tightening cycle when the market was trying to price it all out," said Imre Speizer, senior market strategist at Westpac Banking Corp in Auckland. "It gave the kiwi a bit of a lift, and you can see that by the pull-back in the Aussie-kiwi (cross rate)."

The kiwi rose to 90.01 Australian cents at 5pm in Wellington from 89.68 cents yesterday.

Wheeler reiterated his view that the kiwi dollar was still unjustifiably and unsustainably high, even after its slide from a peak in July, and that any further decline will be dependent on whether the US dollar is heading for a significant appreciation as traders prepare for higher interest rates in the world's biggest economy.

Government figures today showed New Zealand's guest nights were at a record for a September month at 2.9 million in September, driven by a rebound in international visitor numbers.

The kiwi dollar rose to 90.47 yen at 5pm in Wellington from 89.06 yen yesterday, holding near a seven-year high, amid speculation mounts that Japan's Prime Minister Shinzo Abe may call a snap poll before the end of the year to seek a mandate for a planned second increase in the country's sales tax to 10 percent from next October

The kiwi gained to 62.73 euro cents from 62.33 cents yesterday, and advanced to 49.15 British pence from 48.90 pence.