The New Zealand dollar weakened as traders deemed the US dollar had been oversold following the Federal Reserve's decision last week to pull back its plans to hike interest rates.

The kiwi was trading at 67.96 US cents at 8am in Wellington, from 67.94 cents at the New York close and 68.36 cents at 5pm on Friday. The trade-weighted index declined to 72.08 from 72.29 on Friday.

The US dollar DXY index, which measures the greenback against a basket of currencies, dropped sharply to a five-month low last week after the Federal Open Market Committee lowered its projected rate hikes for this year to two from four, citing weaker prospects for the global economy. The index lifted from its lows over the weekend as some traders bet the decline was overdone.

"Most investors were likely still stunned by the surprise back-down on the rates outlook by the FOMC on Thursday and were busy reassessing views on the outlook for the US dollar," Bank of New Zealand currency strategist Jason Wong said in a note.


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"In the end, those who thought the US dollar was probably oversold in the aftermath of the FOMC meeting won the battle, with the US dollar DXY index rising by 0.3 percent, after its post-FOMC fall of about 2.2 percent".

In New Zealand today, the Westpac McDermott Miller consumer confidence index for the first quarter is released at 10am and Statistics NZ publishes February migration and tourism data at 10:45am.

The New Zealand dollar was little changed at 89.22 Australian cents from 89.30 cents on Friday, 60.37 euro cents from 60.39 cents. It edged lower to 47.06 British pence from 47.27 pence, declined to 75.84 yen from 76.04 yen, and fell to 4.3958 yuan from 4.4197 yuan.