The dollar fell 3% against the Japanese yen and commodity-linked currencies tanked today, as a 30% crash in oil prices and tumbling stock markets panicked investors and sent currency prices swinging wildly.
A gauge of volatility in the euro/dollar market - the world's most-traded currency pair - shot to its highest since April 2017 as the euro surged more than 1% to its strongest since January 2019.
Oil prices fell 30% today after Saudi Arabia pledged to slash prices and boost production following the collapse of an OPEC supply agreement.
That unnerved investors already rattled by more than a weak of wild moves in markets, as they struggled to assess the economic damage caused by the coronavirus.
"Financial markets have suffered a rude awakening to notions that volatility was a thing of the past. We're now seeing the kind of market dislocation not witnessed since the 2008-09 global financial crisis," ING analysts said.
They described the set-up as a "perfect storm" for currency markets.
In hectic trade, the dollar fell as low as 101.55 yen its lowest in more than three years. It was last down 3% at 102.28 yen.
The euro rallied 1.2% to $1.1419 after earlier touching $1.1495.
The dollar index dropped to its weakest since September 2018 before recovering somewhat to trade at 95.132, down 0.3%.
The Swiss franc added more than 1% against the dollar but was flat versus the euro.
The biggest moves were in currencies linked to oil prices.
Norway's crown tumbled to record lows. The euro added nearly 5% and the dollar gained more than 4%, before easing back.
The Canadian dollar shed 1.5%, while the Russian rouble fell as much as 6% and the Mexican peso 7% against the dollar.
The Australian and New Zealand dollars fell nearly 2% before bouncing back.
The yen is headed for its largest three-day gain since the 2008 financial crisis. It is up around 9% in a dozen trading days.
The gain is bad news for exporters and has raised concerns among policymakers in Japan. A senior finance official warned that authorities were closely watching trade.
In times of low volatility - and currency market volatility has been at or near record lows for several years - investors borrow heavily in low- or negative-yielding currencies like the euro and yen to buy higher-yielding foreign exchange elsewhere.
Sudden risk aversion and volatility send investors panicking to reverse those positions, causing wild moves in currencies.