The New Zealand dollar fell to an eight-month low on weak manufacturing data in China, sapping investors' appetite for riskier or higher-yielding assets and leaving the currency open to a sharp drop on a technical basis.

The kiwi fell as low as US74.22c and traded at US74.35c at 5pm, down from US74.86c at 8am.

Investors spurned risk-sensitive currencies, pushing the kiwi to its lowest level since March 21 after the HSBC flash manufacturing purchasing managers' index showed industrial activity in the world's second-biggest economy contracted this month.

The PMI fell to 48, its lowest reading since March 2009. That added to investor nervousness with speculation Dexia may have bigger liabilities than expected.

Khoon Goh, head of market economics and strategy at ANZ New Zealand, said: "The kiwi is precariously perched around US74.50c, and I wouldn't want to see that go down too far as there's quite a big support gap between that and the next one."

The US Thanksgiving holiday tomorrow may add to global volatility, with thin trading for a couple of days in the New York session, and that could leave an opening for sharp movements, Goh said.

Heightened fears about the global economy may keep interest rates lower for longer, and traders have started to price in the possibility of a rate cut to New Zealand's record low official cash rate of 2.5 per cent.

The kiwi fell to 57.20 from 57.53 yesterday, and gained to A76.05c from A75.77c. It was little changed at €55.21c from €55.36c on Tuesday, and slipped to 47.62p from 47.77p.