The New Zealand dollar sank to a six-month low against the US dollar and a similar low against the Japanese yen, losing further ground on risk aversion in reaction to the potential nuclear disaster unfolding in Japan following Friday's massive earthquake.
Japan Prime Minister Naoto Kan said radiation levels were rising at a nuclear plant in the country's quake-devastated northeast coast after further explosions and a fire in the reactor. World equity markets plunged, with Tokyo's Nikkei share average falling 14 per cent shortly after the comment and Australian shares losing 3 per cent.
"Comments from Japanese Prime minister Kan did a brilliant job of sending the market into a complete tailspin, with waves of selling hit most markets across the world," IG Markets strategist Ben Potter said.
"There's just so much uncertainty; nobody bar a few nuclear experts actually know what's happening, which is the scary thing. Some reports are saying winds could blow low level radiation into Tokyo in 10 hours while others dismiss the fact."
By 5pm, the kiwi was at US73.14c, down from US73.91c late yesterday afternoon and the day's high around US74c.
The kiwi fell to 59.55 yen from 60.67 yen yesterday but was fairly steady against the Australian dollar at A73.40c from A73.34c.
The currency was also softer against the euro and sterling, at 0.5255 euro from 0.5310 yesterday, and at 45.38p from 46.03p.
The trade weighted index fell to 59.55 from 60.67.
The US dollar eased against the yen, and traders speculated the Bank of Japan may have intervened in currency markets. There was also talk the bank had checked currency rates, a tactic sometimes used before intervention to scare traders against chasing the yen higher.
Finance Minister Yoshihiko Noda said he was monitoring moves in the yen but did not comment on whether Tokyo had intervened in currency markets.
Expectations that Japanese insurers and companies will repatriate funds to help pay claims and reconstruction costs pushed the yen to a high of 80.60 yen per US dollar on Monday, not far from the record high of 79.75 to the US dollar struck in 1995.