The New Zealand dollar shed about half a US cent after Spain's borrowing costs rose and European officials said Greece had little hope of meeting the terms of its bailout, sapping risk appetite and demand for so-called growth assets.

The New Zealand dollar fell to 78.59 US cents just before 8am from 79.18 cents at 5pm yesterday. The trade weighted index decreased to 71.55 from 71.90.

Spain paid the second highest yield on short-term debt since the euro started at auction, with its 3 billion euros of three- and six- month bills jumping to 3.961 from 3.237 a month earlier, Reuters reported. Officials from Greece's troika of international creditors arrive in Athens today amid doubts the indebt nation will meet commitments for its bailout.

"Broadly speaking it is risk-off again overnight," said Stuart Ive, currency strategist at HiFX. "The markets are firmly fixed on the events within Greece and Spain. The kiwi and the Aussie are slowly grinding lower."


Moody's Investors Service cut the outlook on the Aaa rating for Germany, the Netherlands and Luxembourg to 'negative', citing the "increased likelihood of Greece's exit from the euro area".

The kiwi fell to 65.10 euro cents from 65.27 cents.

New Zealand traders are also focused on the Reserve Bank's review of the official cash rate on Thursday, which is expected to remain unchanged at 2.5 per cent. Overseas merchandise trade for June will be released by Statistics New Zealand this morning.

The New Zealand dollar was little changed at 76.70 Australian cents from 76.82 cents. The kiwi fell to 50.66 British pence from 50.97 pence and dropped to 61.42 yen from 61.94 yen.