The New Zealand dollar slipped below 71 US cents as investors prepare for the Bank of Japan's policy review today which is expected to inject even more stimulus into the world's third-biggest economy.

The kiwi fell to 70.77 US cents from 71.11 cents late yesterday and was little changed at 74.53 yen from 74.50 yen.

Bank of Japan governor Haruhiko Kuroda is expected to deliver more stimulus to the Japanese economy at the conclusion of the bank's policy meeting today, adding to the government's 28 trillion yen fiscal package announced this week. Japanese policy-makers have been trying to invigorate the economy, although Kuroda has rejected the prospect of using 'helicopter money', where the central bank directly funds the government.

"Expectations are widespread that the BoJ will deliver a reasonably comprehensive easing, possibly including additional rate cuts and more QE," ANZ Bank New Zealand chief economist Cameron Bagrie said in a note. " A higher USD/JPY overnight shows that markets are looking for something big and bold."


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The Bank of Japan policy review follows one from the Federal Reserve, which said near-term risks to the US economic outlook had diminished and the labour market had improved, suggesting it will raise rates later this year. Still, markets took the message that the Fed isn't in a rush to hike rates, which meant the kiwi dollar remained well supported, with expectations that New Zealand's looming rate cuts won't be deep enough to diminish the appeal of the yield on offer.

ANZ's Bagrie said looser monetary policy in New Zealand only "knocks off the topside" and that "until we see the tenor of the data turn or something major offshore, the NZD will remain elevated."

The local currency slipped to 94.27 Australian cents from 94.42 cents yesterday and fell to 4.7089 Chinese yuan from 4.7366 yuan. It dropped to 63.89 euro cents from 64.25 cents yesterday and decreased to 53.76 British pence from 53.93 pence. The trade-weighted index declined to 75.71 from 76.02 yesterday.