The New Zealand dollar recovered a little today, having slipped overnight to a month-low against the greenback and a two-month low against its Australian counterpart.
Traders said the kiwi was looking increasingly shaky but higher-yielding currencies like the Australian and New Zealand dollars recouped losses against the yen after investors cut back their positions in carry trade overnight.
The fall in the kiwi would bring some relief to hard pressed exporters, but make imports, such as oil, more expensive.
Overnight, the kiwi's slide against the US dollar turned near vertical for a brief time with the NZ dollar losing around a third of a cent in just 15 minutes around 4am as stop losses were triggered.
From US73.40c at 5pm yesterday, it opened at US72.84c and then closed the session on US72.93.
The US dollar also rallied to one-month highs against the euro and 2-1/2 month peaks versus the yen as investors trimmed bearish bets on the greenback after key central bank meetings this week.
Comments by US Treasury Secretary Henry Paulson that a strong US dollar was in the interest of the United States also helped the greenback's rally gather momentum, traders said.
Sentiment on the US dollar has been negative for weeks on concerns over the US economy and expectations for higher interest rates in Europe and Britain, pushing bearish positions on the currency to stretched levels.
But the outcome of three central bank meetings from the Federal Reserve, Bank of England, and European Central Bank offered few surprises, giving dealers little incentive to further sell the US dollar.
Against the aussie, the kiwi eased to A88.04c from A88.22c at 5pm yesterday.
The NZ dollar's fall against its trans-Tasman counterpart has been particularly noticeable since last Friday when it was up around A89.70c.
ANZ bank today said selling of the kiwi had continued offshore on the belief of better Australian growth prospects.
The kiwi was also down against other major currencies, buying 0.5409 euro from 0.5423 at 5pm yesterday and 87.48 yen from 88.11. The trade weighted index closed on 70.89 from 71.18.