The index is constructed of implied volatilities of S&P 500 Index options and is known as the investors 'fear gauge'.
Meanwhile, the CRB Index of 19 commonly traded commodities fell 1.7 percent on Friday, although it is up about 18 percent from its lows in February. Increased risk aversion and weaker commodity prices tend to weigh on so-called commodity currencies such as the kiwi and Australian dollar, whose exports are tied to global growth.
"The largest currency movements were largely confined to the commodity currencies, reflecting the surge in the VIX and a chunky fall in commodity prices," said Jason Wong, currency strategist at Bank of New Zealand.
Wong said speculation that central banks are nearing the end of the extraordinary stimulus measures, including the European Central Bank's failure last week to take further steps while Federal Reserve officials have sounded more hawkish has contributed to the spike in volatility.
"After a prolonged period of low volatility since the days following the Brexit vote, markets have awoken to the fact that the days of further monetary stimulus might be numbered," he said.
Investors will scrutinise a speech by US Federal Reserve Governor Lael Brainard tonight to gauge if the central bank might hike interest rates next week after all. Today's speech by Brainard, only announced late last week, follows Friday's comments by Boston Fed President Eric Rosengren who warned that the central bank might risk overheating the US economy if it waited too long before raising rates again.
The currency fell to 65.09 euro cents from 65.25 cents in New York on Friday and dropped to 96.94 Australian cents from 97.10 cents. It fell to 55.12 British pence from 55.26 pence and traded at 75.08 yen from 75.24 yen. The kiwi fell to 4.8868 yuan from 4.8982 yuan
