Dollar drops to 10-year low

By Country News

The Australian dollar briefly dropped to its lowest levels in 10 years against the US greenback, before rebounding slightly as currency markets experienced major volatility last week.

The Australian dollar plunged more than three per cent against the US dollar and six per cent against the yen as part of a flash crash in the currency markets.

It hit a low of 67.49 US cents, its lowest level since early 2009, before making up half of its losses five minutes later.

The US dollar, the Aussie and the British pound also crashed against the yen about the same time before similarly rebounding.

‘‘It’s been absolutely nuts,’’ Chris Weston, head of research at Pepperstone Group in Melbourne, said.

‘‘Obviously everyone’s scratching around to find an explanation.’’

Mr Weston said it appeared the US dollar first collapsed against the yen, and that dragged the major currency pairs with it.

He said trading was thin at the time, with United States markets closed and Japanese traders on holiday, and blamed the flash crash in part on algorithmic trading.

‘‘It comes at a time when the markets are very anxious anyway,’’ he said.

At 4pm last Thursday, the Aussie had recovered most of its losses against the greenback, trading at 69.46 US cents.

That is still its lowest level in almost three years, since February 2016.

Meanwhile, the ASX has surged ahead with across-the-board gains.

The benchmark S&P/ASX200 index closed up 75.6 points, or 1.36 per cent, to 5633.4 at 4.15pm on Thursday, led by energy stocks on the back of higher oil prices.