The New Zealand dollar failed to hold on to Monday's slight gains, slumping back below the 43USc mark on light trade.
The kiwi closed at 42.67USc, down from its 43.02c close on Monday and from its 42.94c opening price yesterday morning.
The local unit had a quiet day's trading, with US markets closed for the Labour Day holiday.
It traded in a 42.60-42.90c range and gradually declined during the day, following the euro down as the greenback strengthened, Deutsche Bank forex dealer Daniel Swasbrook said.
There was a lack of interest in the kiwi, and with no real data out yesterday there was little available direction to the currency, Mr Swasbrook said.
Retail sales figures out yesterday were quite minor and were largely as expected, he said.
Statistics New Zealand said seasonally adjusted retail sales rose 0.7 per cent in July, with actual sales of $3.49 billion up 4.6 per cent on July last year.
Mr Swasbrook forecast the kiwi to find support around the 42.50USc level, but said it could drop as low as 42.35c.
The Australian dollar also weakened against the greenback, closing on the local currency market at 57.38USc from 57.68c on Monday.
The 90-day bills rallied slightly to 6.66 per cent from 6.67 per cent.
- NZPA
<i>Currency</i>: Kiwi slips back under 43USc
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