The New Zealand dollar gained more than half a US cent after European policymakers agreed to a 100 billion euro rescue package for Spain's struggling banks, stoking demand for high-yielding, or riskier, currencies such as the kiwi.
The kiwi rose to 77.53 US cents just before 8am from 76.95 cents at the close of trading in New York on Friday and 76.37 cents at the close of local trading on Friday. The trade-weighted index increased to 70.40 from 70.17.
Spain will become the fourth euro-zone nation to receive a financial bailout after European Union finance ministers agreed to shore up the nation's banking sector following an emergency conference call over the weekend.
Leaders didn't make clear whether the loans would come from the region's permanent support fund, the European Stability Mechanism or its temporary European Financial Stability Fund. The EU and IMF have now committed half a trillion euros in euro-zone bailouts.
"There has been a temporary reprieve to the kiwi - but we are still underpinned by events in Europe," said Stuart Ive, currency strategist at HiFX. "Markets see the bailout as a positive since it has lessened the contagion - there is a 100 billion euro ring fence around these banks ahead of what is likely to be a closely watched and unpredictable Greek election."