The dollar has fallen more than a cent against the United States currency, though at one point on Wednesday afternoon it was down 1.5c.
A narrowing in the US trade deficit was reported overnight, increasing demand for the greenback as investors regained confidence in the world's biggest economy.
This pushed the New Zealand dollar down from US69.70c overnight to 69.32c on Wednesday morning.
However, a fresh wave of selling hit the dollar in the middle of the afternoon when Japanese investors are believed to have dumped the currency, pushing the dollar down to US68.26c. The currency ended the day's trading at US68.82c.
Traders attributed the afternoon fall to news that the Japanese economy is edging towards recession for the first time in six years, and investors there are pulling back from risky overseas positions.
The dollar has lost about 10% percent of its value against the greenback in the past month, and economists are predicting it could slide to US60c.
Westpac economist Michael Gordon says the slowing economy, the high US and Australian currencies and an anticipated further drop in interest rates are all contributing to the slide.
Shamubeel Eaqub of JB Goldman Sachs predicts job losses in the retail and hospitality sectors, but believes the economy will recover by 2010, boosted by strong export returns.
A weaker dollar increases the cost of imported goods including raw materials and consumer items, and increases exporters' earnings.
It also slows the rate at which petrol prices drop at the pump, despite falling crude oil prices overseas.
Importers Institute secretary Daniel Silva says the Reserve Bank's cut in the official cash rate in July was puzzling, and simply hurt importers without improving the property market.
A weaker dollar gives exporters bigger profit margins.
One exporter, Ken Stevens of Glide Path, which exports airport conveyor belts to 11 countries, says every drop in the dollar widens the smile on his face.
Mr Stevens says he would like to see the dollar reach about US67c.