The New Zealand dollar fell at the open after Cyprus delayed a vote on austerity measures that are part of a 10 billion euro bailout devised by euro zone finance ministers and would result in the island's depositors losing some of their savings.
The kiwi dollar fell to 82.29 US cents from 82.72 cents in late New York trading on Friday. The trade-weighted index fell to 75.64 from 75.85.
Lawmakers in Cyprus are expected to vote on the Brussels negotiated deal on Monday and the new government may not have the votes to secure its future. Failure to approve the bailout could lead to the collapse of the country's two biggest banks, the government has warned, and that could refresh concerns for the euro zone as a whole. The new helped sap sentiment and demand for currencies such as the kiwi.
"The currency is opening lower this morning following risk-negative news from Cyprus over the weekend," said Kymberly Martin, strategist at Bank of New Zealand. Questions raised over the requirements of the Cyprus plan "should see volatility and risk aversion rise today".
Cyprus's financial strength has been eroded by exposure to neighbouring Greece and among measures proposed in Brussels is for the nation's savers to forfeit 9.9 per cent of their deposits.
Cash points at the island's banks have closed.
The kiwi rose to 63.64 euro cents from 63.25 cents and fell to 54.37 British pence from 54.73 pence. It traded little changed at 79.45 Australian cents and sank to 77.56 yen from 78.80 yen.