The New Zealand dollar may grind higher as investors continue to eschew the greenback amid concern foreign central banks are fretting over their exposure to the world’s reserve currency as the U.S. stacks up debt to revive its economy.

Six of seven economists and strategists in a BusinessWire survey say the currency may push near a 13-month high this week as investors unwind their U.S. dollar holdings.

The last one agreed there was scope for the kiwi dollar to break higher, but said it was reliant on a weaker greenback.

The Dollar Index, a measure of the greenback versus the pound, euro, yen, Canadian dollar, the Swiss franc and Swedish krona, held near a 12-mont low of 76.77 as the prospect of Asian central banks unwinding their holdings in U.S. dollar assets weighed on the currency.

David Dollar, the U.S. Treasury's economic and financial emissary to China said on Friday that China "has a huge amount of reserves and it makes some sense to diversify what you put these reserves (into)."

He made the comments at a meeting of the World Economic Forum in the northeast Chinese city of Dalian. Foreign central banks are concerned the U.S. Federal Reserve's extraordinary measures will stoke inflation and erode the value of the greenback.

The U.S has committed more than US$12 trillion in loans, fiscal stimulus and bailout measures to revive the world's biggest economy.

"Concerns that China and other Asian central banks were stepping up their efforts to diversify out of U.S. dollar assets weighed heavily on the dollar," said Danica Hampton, currency strategist at Bank of New Zealand.

"Not only will a weakening U.S. dollar erode the value of China's and Japan's holdings of U.S. government bonds, but weekend media reports highlight the financial stability risks associated with a sharply weaker dollar."

Hampton was the only strategist not willing to predict a stronger kiwi dollar this week, saying any gains in the currency will rely on further greenback weakness.

An out-of-favour greenback has sent investors to alternative investment such as gold and the yen.

Gold, which is often used by investors to hedge against inflation, rose 1 percent to an 18-month high US$1,006.40 per ounce on the New York Mercantile Exchange on Friday.

China, the world's largest gold producer, has reportedly been stockpiling the precious metal.

The kiwi dollar weakened after retail sales unexpectedly fell in July. Sales declined 0.5 percent from June, according to data from Statistics New Zealand, suggesting a recovery in consumer spending may be curbed by rising unemployment and households' efforts to pay down debt.

The kiwi fell to 69.84 U.S. cents from 70.35 cents on Friday in New York.

Signs of stabilisation in the property sector should underpin the kiwi dollar, said Sue Trinh, senior currency strategist at RBC Capital Markets in Sydney. The median house price rose to $346,500 last month from $340,000 in July, according to Real Estate Institute data out today.