The Australian dollar was near 2-1/2 month lows against the yen and shed over 1.5 percent against the US currency on Tuesday, after investors dumped high-yielding currencies amid a fresh wave of risk aversion. The loss of appetite for risk stemmed from fresh credit market jitters, which led to a decline in stocks on Wall Street.
Investors sold financial shares, worried that rising mortgage defaults and credit market losses will weigh on the US economy. The Aussie was at 93.41/51 yen, down from 95.81/91 yen here late on Monday. The local currency fell to as low as 92.92 yen in offshore trade, its lowest since September 10, as investors unwound carry trades, where they fund purchases of higher yielding currencies by borrowing in the cheaper yen.
The Aussie, was quoted at $0.8699/0.8704 against the US dollar, having fallen to a low of $0.8663 in offshore trade. It had fallen to a two-month low of $0.8651 last week.
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