The dollar took another beating on Thursday after two of Donald Trump's top cabinet members talked down the currency and hinted at a more belligerent trade policy.
The sell-off in the greenback especially hit exporters on Japan's Nikkei index, which tumbled for a second straight day, although dollar-priced oil and gold extended gains.
US Treasury Secretary Steven Mnuchin, speaking at the Davos gathering of the political and business elite, said: "Obviously a weaker dollar is good for us, it's good because it has to do with trade and opportunities."
His comments sent the US unit, which was already under pressure, tumbling with analysts suggesting it could be a part of the Trump administration's America First policy to help its own exporters.
They came days after the US announced stinging tariffs on imports of solar panels and large washing machines, angering China and South Korea.
US Commerce Secretary Wilbur Ross defended those tariffs and warned Washington would be prepared to fight back in future against countries it felt had flouted the rules.
The developments ramped up fears of a global trade standoff and worries about their impact on the world economy, which is finally moving on track a decade after the financial crisis.
"To the extent that trade is disrupted, it's probably not good for economies, for US companies and corporations, and would probably put pressure on the rising stock market," Michael Cuggino, president and portfolio manager at the Permanent Portfolio Family of Funds in San Francisco, told Bloomberg News.
The dollar's sell-off was also helped by investors betting on tighter monetary policies by major central banks, bringing them in line with the Federal Reserve.
The dollar took a hit from the developments and in Asia extended the losses, briefly falling below 109 yen for the first time since September.
- Equities drop -That hit Japan's benchmark Nikkei 225, which ended 1.1 percent lower, having fallen 0.8 percent Wednesday from a 26-year high.
Stephen Innes, head of Asia-Pacific trading at OANDA, said: "While we already knew the administration previously favoured a weaker dollar, his comments caught the dollar prone and defenceless, opening floodgates to a massive wave of dollar-selling."
The pound was 1.5 percent up, above $1.43 and at its strongest since Britain voted to leave the European Union in June 2016.
And the euro was at more than three-year highs above $1.24 ahead of a key meeting of the European Central Bank later in the day that will be studied for indications about its plans for reeling in crisis-era stimulus.
Among other currencies the Australian dollar was nearing highs not seen since mid-2015, while the Korean won was up one percent, helped by data showing the country's economy grew last year at its fastest pace in three years.
The Chinese yuan was at a two-year high, while Indonesia's rupiah, the Mexican peso and South African rand also rallied.
Oil prices climbed as the weaker dollar makes the commodity cheaper for holders of other currencies. WTI was up more than one percent, while Brent was holding around $71.
Crude buying was also boosted by a drop in US inventories and remarks from Russia and Saudi Arabia indicating a commitment to supporting prices.
Gold was up at $1,366, within touching distance of its highest since July 2016. The yellow metal is also seen as a hedge against rising inflation expected to be caused by the weaker dollar.
On equity markets Hong Kong fell almost one percent, with profit-taking adding to the selling pressure after the Hang Seng Index chalked up a succession of records since last week.
Shanghai ended down 0.3 percent, while Sydney fell 0.1 percent and Singapore eased 0.9 percent. Jakarta, Kuala Lumpur and Bangkok also dropped.
However, the strong growth data helped Seoul rise one percent while Manila gained 0.9 percent. Taipei, Wellington and Mumbai were also up.
In early European trade London rose 0.1 percent, Paris was flat and Frankfurt shed 0.3 percent.
- Key figures around 0820 GMT - Euro/dollar: UP at $1.2430 from $1.2402 at 2150 GMT
Pound/dollar: UP at $1.4280 from $1.4217
Dollar/yen: DOWN at 109.00 yen from 109.21 yen
Tokyo - Nikkei 225: DOWN 1.1 percent at 23,669.49 (close)
Hong Kong - Hang Seng: DOWN 0.9 percent at 32,654.45 (close)
Shanghai - Composite: DOWN 0.3 percent at 3,548.31 (close)
London - FTSE 100: UP 0.1 percent at 7,649.75
Oil - West Texas Intermediate: UP 68 cents at $66.29 per barrel
Oil - Brent North Sea: UP 43 cents at $70.96 per barrel
New York - DOW: UP 0.2 percent at 26,252.12 (close)
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