The New Zealand dollar had fallen by about a cent against the US dollar at the end of trading on Friday.
The sharp drop began on Thursday night over speculation the Reserve Bank's loan restrictions could stop interest rates from rising as high as previously thought.
The Bank of New Zealand's currency strategist, Mike Jones, says the two big negative factors are worries over China's property market and the impact on interest rates of the central bank's lending restrictions on the Auckland housing market.
"Anecdotes suggest it is having some negative effect on the Auckland housing market so the market is perhaps reassessing just how much interest rate tightening they're going to have to do over the coming 12 months, and that's weighing on the kiwi dollar as well."
Whatever the case, he says, the Reserve Bank will have to raise interest rates next year.
At 5.20pm on Friday the dollar was trading at 83.21 US cents, and was also lower against the other currencies at 86.59 Australian, 51.32 pence, 80.97 yen, point-6029 euro.
