Key Points:

The New Zealand dollar spent the day retreating from its one-week high reached overnight, weakening as overseas investors changed their positions back in favour of the US dollar.

By 5pm, the kiwi was at US54.16c, up from US53.24c late yesterday afternoon but below its overnight high of US54.70c.

Against the Australian dollar, the kiwi was at A82.27c from A81.65c yesterday. The currency was also stronger against the euro, yen and sterling.

The kiwi had benefited yesterday from the US dollar's decline, as risk appetite was whetted by a strong rally in world stock markets. Hopes of an imminent bailout deal for the three United States carmakers had boosted confidence, and share prices.

However, today the US dollar regained ground against the euro as investors unwound their positions.

"The (US) dollar's dip yesterday seems to have been largely driven by position adjusting, and it is premature to say that the trend in the currency market has changed," Yousuke Hosokawa, treasury department senior manager at Chuo Mitsui Trust and Banking Company, told Reuters.

Investors appeared to still have a low tolerance for risk.

The New Zealand dollar remains a high-yielding currency despite recent central bank interest rate cuts, but along with the Australian dollar is considered a riskier bet than larger currencies such as the yen.

Reuters currency rates:

5pm today 5pm Monday

NZ dlr/US dlr US54.16c US53.24c
NZ dlr/Aust dlr A82.27c A81.65c
NZ dlr/euro 0.4210 0.4167
NZ dlr/yen 50.25 49.45
NZ dlr/stg 36.51p 36.09p
NZ TWI 54.59 --
Aust dlr/US dlr US65.85 US65.18c
Euro/US dlr 1.2870 1.2773
US dlr/yen 92.74 92.89