The New Zealand dollar edged up as the lowest annual pace of inflation in 14 years gave the Reserve Bank of New Zealand room to keep interest rates on hold.

The NZ dollar rose to 78.28 US cents at 5pm from 78.08 cents at 8am and 78.14 cents on Monday. The trade-weighted index rose to 74.35 from 74.26.

Government figures showed the consumers price index rose at an annual 0.7 per cent pace in the June quarter, the lowest level since 1999. It's the fourth quarter inflation has been below the central bank's target band of between one per cent and three per cent.

Cheap imported petrol has kept a lid on general inflation, and pressure on housing-related prices hasn't seeped into general price rises.

"Our forecast is for the Kiwi dollar to be lower over the next year, and we have to factor in the dampening impact of the tradable sector is not going to be there," said Chris Tennent-Brown, FX economist at Commonwealth Bank of Australia in Sydney.

"There's not really too much (in the CPI) to change people's expectation for the RBNZ."

The next major event for traders will be Federal Reserve chairman Ben Bernanke's semi-annual testimony to the House of Representatives on July 17 and 18.

The local currency fell to 85.39 Australian cents at 5pm from 85.90 cents on Monday after minutes to the Reserve Bank of Australia's July 2 meeting said a weaker currency and previous rate cuts meant the 2.75 per cent interest rate level was still appropriate.

The minutes still left the door open for a future rate cut. The Australian dollar rose to 91.65 US cents at 5pm from 91.07 cents on Monday.

"Some people must have been looking for the RBA to be slightly more dovish than that," Tennent-Brown said.

The Kiwi rose to 78.09 yen from 77.57 yen. It was little changed at 59.87 euro cents from 59.77 cents on Monday and increased to 51.82 British pence from 51.67 pence.