An air of optimism about the US economy has put the skids under the New Zealand dollar and a drop below US78c could herald further falls, market strategists said.
The currency was trading at US78.3c at 5pm yesterday - its lowest point in just under a year.
The resurgent US dollar has been responsible for the dramatic fall in the kiwi since April, when it hit US86.75c.
The New Zealand Manufacturers and Exporters Association estimates that a 1 per cent increase in exchange rate has a net annual cost to exporters of $200 million.
But after a 9.7 per cent fall since April, importers will be feeling the pinch, said Peter Cavanaugh at Bancorp, a financial advisory services firm. "It will have blown just about every importer's budget rates out of the water," Cavanaugh said. "We are in a period where the only certainty is volatility," he said.
Financial markets seized upon US Federal Reserve chairman Ben Bernanke's comment late last month to the effect that the Fed may start to wind back its quantitative easing programme.
Since then, the financial markets have taken a less bearish view of US prospects but many remain skeptical that a wind-back of the Fed's bond buying programme is imminent.
The markets are now looking to the Feds' open market committee meeting, set down for next week.
At yesterday's level, the kiwi is not far off a key point of US78c.
"If it breaks through that, it will go a lot further," said Imre Speizer, senior market strategist at Westpac.
Speizer and others did not rule out a rebound in the kiwi - particularly as the end of the year approached and the likelihood of a rate hike in 2014 started to be factored in.
But he said a move below US78c could quickly see a slide to US72c.
"We are on the cusp of something potentially quite dreadful for the kiwi dollar, but it will be good for exporters," Speizer said.
Thursday's monetary policy statement from the Reserve Bank could throw the currency a lifeline, depending on how hawkish - or strict on inflation - the message is, strategists said.