The New Zealand dollar was off its highs after some comments from a central bank deputy governor and ahead of Tuesday's second-quarter domestic inflation data.

The kiwi traded at 73.30 US cents as at 5pm in Wellington versus 73.42 US cents as at 8am in Wellington and 73.45 cents in late New York trading on Friday. It got a solid lift overnight Friday from weak US inflation, retail sales and consumer sentiment figure but ground lower over the session. The trade-weighted index was at 77.97 from around 78.11 late Friday.

"It's still range-bound but it's off its highs," said ANZ senior economist Phil Borkin. Some early risk aversion in Asian equity markets coupled with comments from Reserve Bank deputy governor Geoff Bascand took some of the shine off, he said.

Bascand said a large improvement in New Zealand's net foreign liabilities as a share of gross domestic product (NFL-GDP) makes the economy less vulnerable to shocks. He said one "striking feature" of the improvement is that it has occurred despite the real exchange rate being high over much of the period. Typically a higher exchange rate would contribute to widening the current account deficit but "the improvement in the NFL-GDP suggests that the exchange rate might be more sustainable than previously assumed," he said.

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In some ways that was an acknowledgement, the currency needs to be where it is but he added the caveat that from a growth point of view, a lower exchange rate would help rebalance growth towards the tradables sector, said Borkin.

"The kiwi was already under some pressure and that helped it along its way," said Borkin.

He said, however, the main event risk for the currency is tomorrow's domestic inflation data. Economists expect inflation was 0.2 per cent in the three months ended June 30, for an annual rate of 1.9 per cent, according to the median in a poll of 15 economists surveyed by Bloomberg. That would be below the central bank's projection of inflation of 0.3 per cent in the second quarter for an annual rise of 2.1 per cent.

"Any surprise will see a bit of currency volatility, but I'd be surprised if it pushes on too much unless its a really significant surprise," said Borkin.

The kiwi slipped to 63.93 euro cents from 64.06 cents in New York on Friday and traded at 82.53 yen from 82.67 yen. It fell to 4.9615 yuan from 4.9756 yuan and traded at 55.97 British pence from 56.11 pence. The kiwi traded at 93.81 Australian cents from 93.75 cents.

New Zealand's two-year swap rate fell 3 basis points to 2.23 while the 10-year swaps fell 2 basis points to 3.33 per cent.