The currency initially got a lift after the Fed stripped out the word "accommodative" from its statement, leading markets to think that it was approaching neutral rates and therefore wouldn't require as many hikes in the future.
However, Fed chair Jerome Powell downplayed the change and the greenback recovered.
"The change does not signal any change in the likely path of policy," Powell told reporters, according to CNBC.
"Instead it is a sign that policy is proceeding in line with our expectations."
The kiwi dollar then got a lift when RBNZ Governor Adrian Orr kept rates on hold at 1.75 per cent and was slightly more upbeat without taking a possible rate cut off the table. His statement was largely unchanged from the previous one in August.
"It seems like their core scenario is that they are going to leave rates unchanged" despite leaving the door open for a possible rate cut, said Martin Rudings, a senior dealer in foreign exchange at OMF.
The kiwi reached 66.96 US cents after the Fed announcement. It pared its gains during the course of the Asian session.
The Fed raised rates by 25 basis points to 2.25 per cent, pushing the rate differential between the two nations out to 50 basis points. Based on the Fed's forecasts, that will widen to 150 basis points, which will weigh further on the kiwi, Rudings said.
"People build currency portfolios as a way of earning income. They do it with positive carry, not negative carry," he said.
The kiwi traded at 91.63 Australian cents from 91.72 cents yesterday and declined to 4.5721 Chinese yuan from 4.5826 yuan.
The local currency was little changed at 50.58 British pence from 50.61 pence yesterday and traded at 56.62 euro cents from 56.61 cents. It fell to 75.01 yen from 75.29 yen.
New Zealand's two-year swap rate was down 1 basis point to 2.03 per cent while the 10-year swap eased 4 basis points to 2.90 per cent.
