The dollar has fallen to its lowest level in more than six years against an index of currencies and its lowest in five years against sterling as investors fled US equities for higher-yielding currencies.
The dollar slid to within a cent of this year's record low against the euro, hit its lowest level since 1997 against the New Zealand dollar and tested 10-year lows against the Canadian dollar and six-year lows against the Australian dollar.
The yen plunged against both the euro and the greenback on a steep fall in Tokyo stocks - the Nikkei average dropped more than 5 per cent, dwarfing yesterday's 1.5 per cent loss in the Dow Industrials, and 2.2 per cent in the high-tech Nasdaq.
The dollar hit 91.14 against an index of currencies, its worst showing since January 1997. It dropped to its lowest since 1998 against sterling and 1997 against the New Zealand dollar, and probed its weakest levels since late 1997 against the Australian dollar and 1993 against the Canadian dollar, as rate rise expectations hardened in these already higher-yielding currencies.
The euro rose a quarter per cent against the dollar to two-week highs of $1.1846 by 7.55 a.m. compared with record highs above $1.1930 set in June.
The euro also rose by 1 per cent against the yen to two-week highs above 130, following the rout in Tokyo stocks.
But while the dollar was underperforming against a host of other currencies, it was doing better against the hard-hit yen. It stood half a per cent up at 109.50, more than a yen above three-year lows it set earlier this month.