KEY POINTS:
After hitting the lowest point this year against the greenback amid trading described as "chaos" and "carnage", the New Zealand dollar was streaking back up by 8am today.
From a spike above US72c early yesterday the kiwi was down below US67.20c around 5am today, but by 8.15am was had rebounded strongly to around US69.10c as US stocks staged a late rally.
Just a little more than three weeks ago the NZ dollar was briefly at a post-float high above US81c.
The biggest winner on world markets for now is the Japanese currency.
For the kiwi that meant a fall from above 84.50 yen early yesterday to around 75.25 about 5am. The kiwi's bounce back during the next few hours saw it close to 79 yen by 8.15am.
In its morning brief, ANZ bank there was "absolute chaos" in markets yesterday and overnight the "carnage" had continued.
It was difficult to review yesterday's trading activity when it was a one way street not seen in more than 20 years of being in the market.
"Volumes in the Australasian currencies would have easily created new records globally," ANZ said.
No market participants would have expected such a reaction as positions were exited.
"The movement in the NZD was phenomenal."
Against the euro, the kiwi fell from 0.5340 early yesterday to a low around 0.5010, before rebounding to be at 0.5150 around 8.15am, almost where it was at 5pm yesterday.
The story was different against the Australian dollar, with the kiwi bottoming around A84.90c yesterday afternoon, then tending upwards for much of the time overnight to be at A87c by 8.15am.
The tumult on world markets comes as investors unwind risky trades financed with borrowed yen, on fears of a global funding crisis.
The yen soared against all major currencies overnight and hit its strongest level since November against the euro as the unwinding of carry trades accelerated on evidence companies across the globe were having increasing difficulty accessing credit.
In carry trades, investors finance purchases of more risky higher-yielding assets, such as the NZ dollar, by borrowing in currencies with lower interest rates such as the yen.
- NZPA