The Omicron variant and last week's about-turn by the US Federal Reserve have weighed on the New Zealand dollar, taking it to its lowest point in just over a year.
The kiwi recently traded at US67.46c, down from just over US72c in October and back to levels last seen in late 2020.
The currency is seen as a barometer for risk - rising when global investors are confident and falling when the outlook looks murky.
The emergence of the Omicron variant has made investors risk averse, and US Federal Reserve chairman Jerome Powell's comments this week, to the effect that the Fed is open to a faster reduction in the pace of asset purchases, has been supportive for the greenback.
Powell also moved away from describing inflation as being "transitory" - thereby rowing back from comments he made to that effect made earlier in the year.
The Fed's change of stance saw the US dollar strengthen, in turn putting downward pressure on the kiwi.
The Reserve Bank of NZ's move at its November 24 monetary policy statement to pour cold water on market expectations that there could soon be a 50-basis-point hike in the official cash rate had also served to put downward pressure on the kiwi.
ASB economist Mark Smith puts the kiwi's weakness down to a number of influences.
"The major one has been the swing between a bit more positivity towards risk, which had been NZ dollar-supportive, versus a little more 'glass half full' and more concern about global risk," Smith said.
"There is a lot more uncertainty about the Omicron outbreak and how severe it could be," Smith said.
"And the markets are starting to factor in a much more hawkish Fed, and that is certainly supporting the US dollar."
Another factor weighing on the kiwi was the Reserve Bank stressing a more "considered" approach to reducing monetary stimulus for now, which served to quieten talk in the market that a 50-basis-point hike might soon be on the cards.
Smith said fortunately for exporters, the kiwi had not strengthened with higher commodities prices, as would normally be the case.
"The commodities story has been very, very good," Smith said, pointing to Fonterra's latest milk price forecast upgrade today.
"But we are seeing a disconnect at the moment so it's very much a matter of strong US dollar holding down the NZ dollar, whereas those commodities prices are moving the other way," Smith said.
"That's real positive for a lot of New Zealand producers who will benefit from that disconnect," he said.