The dollar bounced back yesterday from its record lows - but it could return to sub-40USc levels today.
The kiwi closed last night at 40.23USc, down slightly from its local opening price of 40.44c after hitting an all-time low of 39.92c on Wednesday.
The drop came after the Reserve Bank left interest rates unchanged and Governor Don Brash talked of stagflation.
Currency dealers said weakness followed a drop in the aussie after the Reserve Bank of Australia also left interest rates unchanged.
The market regained its nerve yesterday and Sean Brown, of Deutsche Bank, said overseas buyers helped to restore the kiwi overnight on Wednesday.
"There was a bit of buying interest in the overnight market which is giving it a little bit of stability. There were times when the kiwi didn't look very stable at all - it didn't look like there were any buyers in the market," Mr Brown said.
The kiwi outpaced the Australian dollar, picking up ground on the aussie as the latter also hit record lows.
"There's been some demand in the NZ dollar market and not in the Australian dollar market.
"There's still going to be a bit of demand around 39 to 40USc, and we're probably a little bit toppish above 40.80USc," said Mr Brown.
"We might drift [below 40USc] because I favour the euro drifting off over the next day and we do seem to trade with that a little bit."
NZPA
<i>Currency:</i> Overseas interest boosts kiwi
AdvertisementAdvertise with NZME.