The New Zealand dollar fell to a three-week low against the greenback, as investors ditched all manner of risky assets, including higher-yielding currencies and stocks.
The United States dollar was headed for its best day in nearly two years against a basket of major currencies as a gloomy US outlook and weak Chinese data suggested the world economy was slowing.
By 8am today the NZ dollar was buying US71.65c, down from US72c at 5pm yesterday and having briefly dropped below US71.45c.
The US dollar had been under steady pressure in the past six weeks as weak US economic reports fed fears that the US economy was slowing while data from the euro zone and elsewhere appeared to be holding firm.
But markets have since grown anxious about the state of the broader world economy, with some investors afraid the sluggish US economy will slow growth beyond American shores as well.
Data showing a slowdown in Chinese factory output intensified these fears, analysts said.
ANZ bank said that despite the higher risk aversion levels globally, the fall of the NZ dollar was relatively subdued in comparison to that of the euro.
Yield demand had cushioned the fall of the NZ dollar in the face of poor US equity performance, ANZ said.
The kiwi was up to 0.5562 euro at 8am from 0.5489 at 5pm, while dropping to 61.18 yen from 61.36.
Heavy purchases of safe-haven US Treasuries, which pushed yields lower, helped the yen as Japanese investors with large US dollar-denominated Treasury holdings repatriated profits. Japan is the second-largest holder of Treasuries after China.
The kiwi rose to A79.73c at 8am from A79.28c at 5pm. ANZ said moves on the cross were difficult to fathom, with the NZ dollar pushing higher despite a lift in Australian consumer confidence.
The trade weighted index was 66.77 at 8am from 66.58 at 5pm.