March 12 (Bloomberg) -- New Zealand’s dollar rose to a two- week high against the greenback after central bank Governor Alan Bollard signaled he will slow the pace of interest-rate cuts after dropping them to a record. Australia’s currency gained.

The New Zealand currency also strengthened against the yen and reached a 1 1/2-week high against Australia’s dollar after Bollard lowered the benchmark rate by 0.5 percentage point to 3 percent and said further reductions will be “much smaller than observed recently.”

“The expectation that the RBNZ will be more moderate with cuts going ahead has provided support to the currency,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. “A push up toward 52 U.S. cents is not out of the question,” for New Zealand’s dollar, she said.

New Zealand’s dollar climbed to as high as 51.32 U.S. cents, the strongest since Feb. 26, and traded at 51.27 cents as of 9:50 a.m. in Wellington, from 50.49 cents late in Asia yesterday. It bought 49.87 yen from 49.71 yesterday. The kiwi, as the currency is also called, advanced as much as 1 percent against the Australian dollar to NZ$1.2699, the highest since March 2.

Australia’s currency rose 0.6 percent to 65.17 U.S. cents from 64.78 cents late in Asia yesterday. The currency slipped 0.5 percent to 63.42 yen.

“We do not expect to see in New Zealand the near-zero policy rates of some countries,” Bollard said today in a statement.

Seven of 13 economists surveyed by Bloomberg News forecast today’s reduction. Three expected a 0.75 percentage point cut and three forecast Bollard would lower rates by one percentage point.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

Last Updated: March 11, 2009 17:05 EDT