The New Zealand dollar dropped by US1c after the Reserve Bank surprised the market with a 25 basis point official cash rate cut to 2.25 per cent.
Market expectations were for the bank to keep the rate steady.
In the minutes following the decision, the New Zealand dollar sank from US67.80c to US66.53c before recovering a little ground to US66.77c.
Reserve Bank Governor Graeme Wheeler said the currency's trade-weighted exchange rate was more than 4 percent higher than projected in December, "and a decline would be appropriate given the weakness in export prices".
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ANZ senior economist Sharon Zollner said the currency's reaction showed that Wheeler was getting more "bang for his buck".
"He is probably quite pleased to see the currency reaction," she said.
"There is something to be said for surprising the market if you want more bang for your buck, and he appears to have achieved that today," Zollner said.