The New Zealand dollar has taken a further hit after China's central bank devalued the yuan for the second time in two days.

New Zealand and Australian shares fell and world oil prices were down.

The move by China, which appears aimed at shoring up its export-driven economy, had the knock-on effect of pushing the kiwi dollar below 65 United States cents in afternoon trading on Wednesday. 

There were widespread falls on the New Zealand sharemarket on Wednesday, and the top 50 index was down about 1.12 per cent, its biggest drop this year.

Forsyth Barr head of research Rob Mercer said investors were rethinking their asset allocations as some equities reached full value.

"There's definitely some downside earnings pressure coming through," Mercer said.

Over the past decade New Zealand had outperformed most markets including Australia so Wednesday's declines were immaterial, he said.

But New Zealand was heading towards an economic slowdown on the back of falling dairy prices and investors were wary of that.

"We are heading into a difficult time," Mercer said.

The Chinese devaluation also knocked down the Australian dollar and Australian shares, which fell to a seven month low, with mining company shares smashed down.

The Australian dollar fell almost a full cent to US72.15c within minutes, mirroring a fall seen on Tuesday. It recovered slightly to US72.3c in late trading.

A Westpac economist said the Chinese cut would be bad overall for New Zealand exporters, including dairy farmers.

Chinese authorities devalued the currency against the US dollar by a further 1.6 per cent, after suddenly cutting its value by 1.9 per cent on Tuesday.

The kiwi fell to US64.98c on Wednesday afternoon after China implemented its second cut.