The transtasman currencies fell sharply yesterday after China allowed its yuan to fall to levels last seen in 2012, a move which could provide a competitive boost to exports from the world's second-largest economy.
The New Zealand fell to US65.5c immediately after the announcement but rose against the yuan.
The Australian dollar fell US1c to US73.47c and the US dollar lurched higher.
The Australian dollar is often used as a liquid proxy for the Chinese currency, meaning the currency was hit harder than some others.
Asian stocks mostly held firm as investors considered the implications of the surprise move, which seemed to end months of officially sanctioned yuan strength.
If the kiwi retains its rise against the yuan, New Zealand exporters will find it harder to remain competitive, particularly Fonterra, which relies on China for much of its dairy exports.
Importers, such as bulk buying chains, will benefit from being able to source lower-priced goods to resell into New Zealand.
The People's Bank of China said it had changed the way it calculated the currency's daily midpoint against the US dollar.
China managed the exchange rate through an official midpoint, from which trade could rise or fall 2% on any given day.
The China central bank said it would now base the yuan's midpoint on market quotes and the previous day's closing price.
The move came after weaker Chinese trade and manufacturing data was released at the weekend, raising concern about an economic slow-down.
ASB foreign exchange spokesman Tim Kelleher said China was trying to bolster its economy and the easiest way of doing that was by making it better for the exporters, making them more competitive globally.
''It's more monetary easing in Asia. Theoretically, it will decrease our competitiveness as well. If all the countries are easing their monetary policy, then it puts further pressure on the Reserve Bank to ease as well.''
The Reserve Bank was still expected to cut the official cash rate at least twice more by October, taking it to 2.5%.
Asia-Pacific macro strategist at TD Securities, Annette Beacher, said any policies that boosted the outlook for Chinese growth were positive for the growth outlook more broadly.
''As the event has boosted the US dollar and dampened local currencies, it is likely to be welcomed by regional central banks.''
