The NZ dollar was ditched today by Japanese investors fearful of a financial meltdown in the Middle East but it found support at lower levels.

The yen hit its highest level in 14 years against the US dollar and also rose against the New Zealand and Australian dollars.

The NZ dollar was US71.05c at 5pm from US71.62c at 8am and US72.49c at 5pm yesterday. The low of US70.45c has not been seen since September.

The NZ dollar fell to 61.13 yen from 62.86 yen yesterday.

Dubai struggled to ease fears of a debt default after moving to delay repayments at two flagship firms, reducing confidence in the Middle East as a source of capital.

Westpac currency strategist Imre Speizer said the Dubai news had been a catalyst for a fall in the local currency at a time when sentiment was fragile.

"We've had this major selling going off. A lot of it happened in Japan, which tells us it's Japanese margin punters getting stopped out," he said.

The so-called "Mrs Watanabe" investors had been buying New Zealand dollars again and were now selling. Mrs Watanabe is a market metaphor for Japan's housewife yen speculators.

"She (the so called Mrs Watanabe) is very long. We've been following her position and it is not at record long levels but it is quite long," he said.

Mr Speizer said that if the NZ dollar closes below US70.80c in New York trading tonight it could be in for a move in the 60s.

The Australian dollar also fell to US90.39c from US92.41c yesterday.

The NZ dollar has been at five month lows against the Australian dollar around A78.19c, but was at A78.60c at 5pm from A78.41c yesterday.

Against the European currency, the NZ dollar was around a 2-1/2-month low of 0.4757 euro from 0.4789 yesterday. The trade weighted index fell to 63.36 at the local close from 64.14.