The New Zealand dollar dived against the greenback and yen overnight as downgrades of the credit ratings of Greece and Portugal and worries aid for Greece could be blocked caused risk appetite to fall.
By 8am today the kiwi was buying US71.10c, having spiked above US72.50c, its highest level inthree months, early Tuesday.
The NZ dollar also fell to 66.24 yen by the local open from 67.68 yen at 5pm on Tuesday.
BNZ strategist Mike Jones said that renewed fears about contagion from Greece's fiscal woes saw European borrowing costs and investors' appetite for risk take a clear turn for the worst, with equity prices slumping.
Against that backdrop, investors shunned high yielding or growth sensitive currencies such as the NZ dollar against the greenback, in favour of safe haven currencies such as the US dollar and yen, Jones said.
From levels close to year-to-date highs - around 68.25 yen - the NZ dollar against the yen tumbled more than 2 per cent, which helped drag the kiwi down against the US dollar.
As fears rose that the euro zone's debt problems were spreading, the euro slid broadly.
By today's local open the NZ dollar was at 0.5397 euro from 0.5388 at 5pm yesterday, while the kiwi rose to a two-month high against the Australian dollar around A78.08c overnight before sinking to A77.74c by 8am, slightly down from the local close.
The trade weighted index fell to 66.57 at 8am from 67.03 at 5pm.
