The New Zealand dollar is heading for a 4.2 per cent decline this year, pulled down by a drop in dairy prices and a stronger greenback as the United States economy recovers.
The kiwi traded at 78.44 US cents at 3.30pm in Wellington, from 81.91 cents at the start of the year. The expanded trade-weighted index advanced to 79.40, having started the year at 77.86.
The kiwi soared close to its post-float record this year, touching a high of 88.35 US cents in July, before losing its lustre in the face of declining dairy prices and a pause in interest rate rises.
Still, some analysts say it could strengthen in 2015 if there is a rebound in dairy prices and relatively weak economies elsewhere.
Rankin Treasury Advisory director Derek Rankin says the milk price fall was due mainly to China being overstocked on milk powder, and because products which were going into Russia were dumped on world markets instead due to sanctions on that country.
"Those sorts of effects are seen as relatively transitory," he said.
Mr Rankin said the US dollar was likely to be stronger in the coming year against the euro, yen and pound, reflecting the relative weakness of those economies, but officials there may try to talk its strength down due to its negative economic impact on the country's economy.
The kiwi will probably return back above 80 US cents but is unlikely to reach 85 cents, he said.
"New Zealand's economy is actually performing pretty well. Globally a lot of economies are slowing down."
The New Zealand dollar gained 3.6 per cent against its Australian counterpart this year, recently trading at 95.51 Australian cents.
Rankin says the kiwi could push higher up to 97 Australian cents given the Aussie's sensitivity to falling iron ore prices but doesn't expect the cross rate to reach parity.
The kiwi gained about 8 per cent against the euro this year, recently trading at 64.46 cents, and was up 8.5 per cent against the yen over the year, recently trading at 93.61 yen. It gained 1.9 per cent against the British pound, recently trading at 50.38 British pence.
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