The New Zealand dollar pushed up to a 27-month high against the greenback overnight but then rapidly fell back, to be widely lower early today than it was yesterday evening.
By 8am today the NZ dollar was buying US75.60c, down from its 5pm level of US76.14c, having topped US76.40c around9pm.
Overnight, the US dollar slumped to a 2010 low against a basket of currencies after Singapore said it would guide its currency higher at a slightly faster pace in a bid to contain inflation.
The move was seen as an indication Asian economies are now strong enough to tolerate monetary tightening.
The Australian dollar, which boasts the highest yield among major currencies, soared to its strongest since the currency was floated in 1983, coming within a hair's breadth of parity as it topped US99.9c.
Investors have been dumping the US dollar on expectations the Federal Reserve will start printing money with further quantitative easing as soon as next month.
The ANZ bank said disappointing New Zealand retail sales figures released yesterday left the kiwi without underlying fundamental support.
While it managed to briefly move higher the cracks appeared overnight ensuring a move back below US76c, the bank said.
Increased risk aversion was also evident, with US bank shares hit as investors grew increasingly concerned about the effect on earnings of a nationwide probe into the mortgage industry's foreclosure practices.
The NZ dollar was down to 0.5377 euro at 8am from 0.5411 at 5pm, dropped to 61.55 yen from 61.86 and slipped to A76.27c from A76.43c. The trade weighted index was down to 66.77 at 8am from 67.17 at 5pm.
