The New Zealand dollar gave up ground on Friday after explosions in hotels in Jakarta saw investors cut back on risky trades in higher-yielding currencies.
The kiwi was at $0.6439/46 by 0515 GMT, down from $0.6478 late in local trade on Thursday.
Bomb blasts ripped through two hotels in the Indonesian capital's business district on Friday, killing at least 9 people and injuring 42, police said.
"The kiwi has been pretty choppy. There is some talk the explosions in Jakarta are adding to the risk aversion," said ANZ-National markets economist Philip Borkin.
Earlier in the session the New Zealand currency had traded with a firm tone as rallying world stock markets, after upbeat corporate earnings out of the US, put investors in risk-seeking mode.
The kiwi had recouped virtually all its losses of Thursday, which came after Fitch Ratings affirmed New Zealand's AA-plus rating, but cut the outlook to negative, citing the country's large current account deficit and high foreign debt levels.
Analysts said the rating downgrade risk was set to weigh down on the New Zealand dollar for some time.
In the broader markets, the yen gained across the board as safe-haven demand returned.
Analysts said the rating downgrade risk was set to weigh down on the New Zealand dollar for some time.
In the broader markets, the yen gained across the board as safe-haven demand returned.
There is no major domestic data due next week, with focus already turning to trade numbers and the central bank's interest rate review in the last week of July.
Interest rate swaps were steady, with the two-year swap bid at 3.77 per cent, and the five-year bid at 5.24 per cent.
New Zealand government bonds rose, in line with firmer US Treasuries in Asia. The yield on the benchmark NZ 10-year bond closed 5 basis points lower at 5.71 per cent.