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.