$A opens at two month low

The Australian dollar opened one and a half US cents lower at a three-month low on Friday, after a night of panic on global markets stirred up by fears the Greek financial crisis might spread to other European nations.

At 0700 AEST, the Australian dollar was trading at $US0.8849/50, down from Thursday's close of $US0.8996/98.

It was the weakest open for the Australian currency since February 11, according to IRESS data.

Since 1700 AEST on Thursday, the local unit traded in a wide range between $US0.9075 and $US0.8715.

Investors fled growth currencies such as the Australian dollar during a hectic night of trade in which the Dow Jones Industrial Average briefly lost 1,000 points, Bank of New Zealand currency strategist Mike Jones said.

"Last night was characterised by the fear and panic seen in the deepest, darkest days of the financial crisis," he said.

"People have taken flight from risk assets and sold commodity currencies like the Aussie and bought safe-havens like the yen and US dollar."

During the offshore session, ratings agency Moody's said there was a risk the Greek financial crisis presented a risk of "contagion" for the credit ratings of banks in Britain, Ireland, Italy, Portugal and Spain.

Moody's said in a report that in the wake of the Greek debt crisis "the potential contagion of sovereign risks to banking systems could spread to other countries such as Portugal, Spain, Italy, as well as Ireland and the UK."

But a default by Greece on its debt obligations is not and has never been an option, a spokeswoman for the International Monetary Fund (IMF) said.

A Greek "default is not on the table, has not been on the table," said IMF director of external relations Caroline Atkinson.

The Dow managed to recover two-thirds of its losses to close down 347 points, or 3.20 per cent, at 10,520 points, amid reports that a technical glitch hastened the selling.

European markets also fell, with London's FTSE 100 index backpedalling 1.52 per cent.

In economics news on Friday, the Reserve Bank of Australia is due to publish its latest quarterly Statement on Monetary Policy at 1130 AEST.

Also, Australian Industry Group-Housing Industry Association performance of construction index (PCI) for April was scheduled for release.

Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.

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