The New Zealand dollar dropped below 83 US cents for the first time in almost two weeks as the Reserve Bank of Australia kept the benchmark rate on hold.
The kiwi dollar fell to 82.87 US cents at 5pm from 83.14 cents at 8am, and was down from 84.03 cents in Northern Hemisphere trading.
RBA governor Glenn Stevens kept the target cash rate on hold at 4.75 per cent, saying the bank will continue to watch offshore volatility, and that medium-term inflation is becoming a concern.
The release came after Australian government data showed a bigger current deficit than expected of $A7.42 billion, which further sapped investors' appetite for higher-yielding, or riskier, assets after European stock markets sank amid heightened fears over a sovereign debt crisis.
The kiwi fell 20 basis points immediately after the RBA announcement and was at 78.83 Australian cents at 5pm, down from 79.36 cents on Monday after the release.
The kiwi dollar dropped to 63.64 yen from 65.33 yen on Monday and declined to 58.95 euro cents from 59.46 cents, and fell to 71.65 on the trade-weighted index from 72.48.
