The New Zealand dollar, once favoured by investors because of its high yield, dropped to another six-year low on Friday, after central bank governor Alan Bollard said interest rates are likely to be cut further.
On Thursday the Reserve Bank slashed the Official Cash Rate by 150 basis points from 5% to 3.5%.
Dr Bollard told a business meeting in Christchurch on Friday that, in addition to cutting the benchmark rate further, the bank has substantial capacity to increase the volume of cash in the system if need be.
Soon after, the New Zealand dollar fell to 50.9 US cents - its lowest point since December 2002.
The slide started in March last year as increasingly risk-averse investors began to pull out of the so-called carry trade in which the purchase of riskier, higher-yielding assets is funded by selling low-yielding currencies.
The New Zealand market finished the trading week slightly higher, up 4 points to to 2774 on turnover of $107 million.
Top stocks gained, with Contact Energy up 14 cents to $6.87 and Fletcher Building up 13c to $5.65. Telecom closed unchanged at $2.66.
Asian markets down
In Japan, share prices were down amid a raft of grim domestic economic and corporate news as investors retreated to safety with job losses and collapsing manufacturing deepening a global recession.
The Tokyo Stock Exchange's benchmark Nikkei index lost 257.19 points, or 3.1%, to end at 7,994.05.
The broader Topix index of all first-section shares slipped 24.44 points, or 2.99%, to 794.03.
Stocks in Asia-Pacific outside Japan were down 0.7% and 8% in January, according to an MSCI index.
Hong Kong's Hang Seng index fell 0.5%, led by a 3.75% drop in HSBC stock, which is being hounded by speculation about dividend cuts and the need for additional capital.
The Australian share market managed to claw its way into positive territory at the close of trade, buoyed by gold and energy stocks and a late advance by Rio Tinto.
The benchmark S&P/ASX200 index closed up 14.5 points, or 0.41%, at 3,540.7, while the broader All Ordinaries index had gained 16.8 points, or 0.49%, to 3,478.1.
The spot price of gold in Sydney closed at $US905.80 per fine ounce, up $US22.25 on Thursday's local close of $US883.55.
US crude prices were steady as concerns about a potential strike among unionised American refinery workers kept in check demand worries after bleak economic data from the world's top oil consumer nation.
Crude for March delivery was up 17 cents to $US41.61 a barrel.