Sept. 22 (Bloomberg) -- The New Zealand dollar rose to the highest in more than a year after the nation’s current account gap shrank to the least since 2004 as a proportion of the economy. Australia’s currency advanced. The so-called kiwi also climbed for the first time in four days after Auckland-based Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, raised its milk price forecast for the coming year by 12 percent. Demand for both currencies may be trimmed before the Federal Open Market Committee meets today and tomorrow to decide on U.S. monetary policy. “That’s the best number since September 2004 in GDP terms -- a significant improvement in the current account,” said Imre Speizer, a market strategist at Westpac Banking Corp. in Wellington. New Zealand’s dollar rose as much as 1.5 percent to 71.71 U.S. cents, the highest since Aug. 22, 2008, and traded at 71.67 cents as of 1:16 p.m. in Wellington. It advanced 1 percent to 65.68 yen. Australia’s currency gained 0.3 percent to 86.54 U.S. cents from 86.30 cents in New York yesterday. The currency bought 79.50 yen from 79.32. The New Zealand dollar touched 71.58 cents on Sept. 17, the highest since August 2008. Australia’s dollar reached 87.75 U.S. cents the same day, also the most since August 2008. Current Account, Dairy New Zealand’s current-account deficit shrank to NZ$10.61 billion ($7.5 billion) in the 12 months ended June 30, the narrowest annual gap in more than four years, Statistics New Zealand said. The median estimate in a Bloomberg survey of nine analysts was for a NZ$13.3 billion gap. The annual deficit was 5.9 percent of gross domestic product, less than the 7.4 percent forecast by economists in a Bloomberg News survey, and the least since the period ended September 2004. The currency extended gains after Fonterra said its expects to pay its New Zealand farmers NZ$5.10 ($3.64) for each kilogram of milk solids supplied in the year ending May 31, up from a previous forecast of NZ$4.55. The new estimate “fully factored” the strength of the kiwi which remained a concern, Fonterra Chairman Henry van der Heyden said today. “This upgrade is good news for the massive dairy and hence export sector -- hence New Zealand dollar positive,” Annette Beacher, an economist at TD Securities Ltd. in Singapore, wrote in a note to clients. Exports, GDP Australia, the world’s largest shipper of coal, iron ore and wool, today kept its forecast for a decline in commodity exports this fiscal year little changed at A$158 billion ($137 billion) in the year ending June 30, 2010. That compares with a June estimate of A$160 billion and a revised A$197 billion for the previous year, according to the Canberra-based Australian Bureau of Agricultural and Resource Economics. Gains in New Zealand’s currency may be trimmed before a government report tomorrow that will probably show the economy shrank for a sixth-straight quarter. The second-quarter gross domestic product figures will show a 0.2 percent contraction, according to the median estimate of 12 economists in a Bloomberg News survey. Three economists expect a flat to positive reading. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 4.12 percent from 4.09 yesterday. Australian government bonds fell, ending two days of gains. The yield on 10-year notes added three basis points, or 0.03 percentage point, to 5.35 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 slipped 0.183, or A$1.83 per A$1,000 face amount, to 99.303.