The Australian dollar dropped back towards multi-year lows on Friday, posting its biggest weekly decline since being floated in 1983, as panicky investors dumped higher-yielding currencies on fears of a global recession. Investors flocked to the relative safety of government bonds and gold.
Australian bill futures surged, notching their biggest weekly rise ever, boosted by safe-haven inflows and speculation of more co-ordinated interest rate cuts by central banks. The Group of Seven (G7) rich nations are meeting in Washington later in the day when they will discuss fresh moves to thaw frozen credit markets and cushion their economies from a sharp slowdown in economic activity.
By late Friday, the Aussie fell to $0.6613 from $0.6852 late here on Thursday and not far from a five-year low of $0.6448 struck earlier this week. It plunged 17 percent over the week as investors cut exposure to commodity and higher-yielding currencies in a savage sell-off.
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