Smalley said the drop in the currency and a fall in Australia's share-market would also have encouraged Australian institutional investors to sell out of overseas investments like Mighty River Power and get back into their own market.
Smalley said the ASX200 had lost around 200 points since mid April - a fall of around 9.5 per cent - which almost directly correlated to the 10.7 per cent which Mighty River Power had fallen by.
"I think the majority of selling is coming from foreign investors."
"We have seen very little, if any selling from our client base."
Smalley said he had told nervous clients that the stock should be seen as a long-term investment and that it shouldn't matter if it was trading at $2.80 or $2.30 at the moment.
"It's a long-term investment. The fundamentals haven't changed."
William Curtayne, a senior analyst at fund manager Milford Asset Management, said the market had been weak in general and demand for yield stocks had dropped internationally because of the growing belief that interest rates will rise.
Curtayne said one of the key drivers would also have been the drop in the New Zealand dollar.
"Offshore buyers who didn't hedge will be making losses."
Curtayne said a business update released last week by Mighty River Power had showed the company was on track and appeared in line to meet its forecasts in the investment prospectus.
Mighty River Power is expected to have some relief next month as it enters the NZX 50 index. It missed out in the June quarterly index review because the company had not been trading for 20 days.
Curtayne said Mighty River Power's share price was "not a great start" to the Government's mixed ownership model programme and would likely mean it would have to sell Meridian - the next power company off the block - at a lower price.
The poor performance of Mighty River also meant it was more likely Meridian would be sold in two tranches.
