Australian dollar hits seven-month lows

The Australian dollar extended losses to seven-month lows against the US currency on Tuesday as fresh financial sector woes prompted investors to sell riskier assets and high-yielding currencies. The failure of the Columbian Bank and Trust in Kansas, the ninth US bank to fail this year, and the Danish central bank's bail out of the ailing Roskilde Bank reminded investors that the global credit crunch is still taking its toll.
Those jitters pulled stock markets sharply lower and investors unwound risky carry trades, where they borrow in the cheap Japanese yen to buy higher-yielding currencies. The Aussie dollar was at $0.8570/72 against the US dollar, down 0.8 percent from $0.8640/45 late here on Monday.
It fell as far as $0.8564, its lowest since January 22 and is now down nearly 15 percent since striking a 25-year high of $0.9851 last month. The Aussie also dropped as low as 93.51 yen, from 95.10 yen late here on Monday and not far from a four-month low of 93.09 yen struck two weeks earlier.