The Australian dollar fell as much as 4 percent against the Japanese currency in less than 24 hours, suffering its biggest decline in five months as investors unwound riskier bets amid a sell-off in global stock markets.
At one stage the Aussie rebounded about 2 percent to 104.54 yen - still 3 percent short of last week's 16-year high of 107.72 yen - before easing again. Against the US dollar, the Aussie fell 2 percent in offshore trade and seesawed on Friday.
Wall Street's S&P 500 index of stocks shed about $300 billion in market value on Thursday in the biggest single-session loss in five months on signs of further US housing market weakness and deteriorating conditions for corporate buyouts.
The S&P 500 had touched a record high last week.
"It would be naive to think this is just a one-off event," said Peter Pontikis, treasury strategist at Suncorp. "The bottom line is there is probably more to go, if anything just to see the currencies, the Aussie and kiwi, return back to value levels."