* NZ dollar hits highest level since May 2015
* RBNZ cuts interest rates by 25 basis points as expected
* Kiwi jumps as some were betting on 50 basis point cut
* U.S. dollar index nurses losses, hovers near 1-week low
By Masayuki Kitano
SINGAPORE, Aug 11 (Reuters) - The New Zealand dollar surged to its highest level in more than a year on Thursday after the Reserve Bank of New Zealand cut interest rates as expected, disappointing some who had been betting on more aggressive easing.
The New Zealand dollar rose to as high as $0.7351, its highest level since May 2015. The kiwi later came off that high and was last trading at $0.7287 NZD=D3 , up 1.4 percent from late U.S. trade on Wednesday.
The kiwi jumped after the Reserve Bank of New Zealand (RBNZ) cut its benchmark interest rate by 25 basis points to a record low 2.0 percent, as widely expected, and indicated at least one more rate cut would be needed.
There was disappointment with the RBNZ's decision since there had been some speculation that it might cut interest rates by 50 basis points, said Steven Dooley, currency strategist for Western Union Business Solutions in Melbourne.
Moreover, the kiwi is rising on the back of strong investor appetite for higher yields, he added.
"At the moment we're really in a super-charged market when it comes to high-yielding currencies... Everyone's looking for an opportunity to buy," Dooley said.
Along with the Australian dollar, the kiwi has been buoyed by the allure of its relatively high bond yields.
New Zealand dollar 10-year government bonds NZ10YT=RR have a yield of around 2.1 percent, compared with negative yields in Japan and Germany.
The U.S. dollar struggled to gain traction, amid doubts over whether the Federal Reserve will raise interest rates this year.
The dollar index, which measures the greenback's value against a basket of major currencies, last traded at 95.571 .DXY =USD , holding within sight of a near one-week low of 95.442 set on Wednesday.
Against the yen, the dollar eased 0.1 percent to 101.20 yen JPY= , having pulled back from a high of 102.66 yen set on Monday, in the wake of last Friday's strong U.S. nonfarm payrolls data.
The euro edged up 0.1 percent to $1.1186 EUR= .
Although strong U.S. jobs data released last week gave a boost to the dollar, the greenback has since given back its gains.