The dollar recovered yesterday after dipping to a six-week low against the greenback, but suffered a late setback after the Foreign Minister said it had room to fall a further 27 per cent.
ANZ says the currency has made sharp and violent moves in recent days but brief dips below support at US75.75c have been extremely short-lived.
Bank of New Zealand currency strategist Danica Hampton said market participants remained concerned about weakness in global credit markets and an associated pick-up in risk aversion and asset volatility.
Heavy selling from short-term speculative players had knocked the dollar down, and they were sellers into rallies.
The kiwi recovered yesterday after US equity markets clawed their way back into positive territory and as a business survey showed confidence was holding up in New Zealand.
However, the currency was knocked lower in late-afternoon trading as Foreign Minister Winston Peters said in Manila that the kiwi was overvalued and had room to fall a further 27 per cent.
His comments, following the currency's 6 per cent fall in recent days, pushed the kiwi below US77c.
From US76.12c at 5pm Monday, the kiwi dropped below US75.60c but rebounded throughout its domestic session to a high of US77.31c.
By 5pm yesterday, the kiwi had slipped back to US76.87c.
Against the Australian dollar, it was at A89.44c from A89.60c late on Monday.
The kiwi hit a two-month low against the Japanese currency, dropping towards 89.3. It then strengthened to 91.36 by 5pm yesterday.