The Australian dollar has fallen to a fresh 3½-year low after Reserve Bank of Australia board member Heather Ridout joined the chorus of central bank officials talking down the currency.
The dollar tumbled in late trade on Friday to US86.97¢, its lowest level since July 2010, after Ms Ridout said the ''dollar around US80¢ would be a fair deal for everybody''.
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''I think it hasn't fallen far enough,'' Ms Ridout said in a interview with The Wall Street Journal, continuing the central bank's attempts to talk down the currency late last year.
The late beating extended Thursday's falls in the currency in the wake of weak Chinese data. The dollar came under selling pressure and emerging market and commodities currencies sank across the board after jitters over a private gauge of Chinese manufacturing sparked a flight to safe haven assets.
It followed a recent run of soft data for the world's second largest economy and Australia's largest trading partner.
"You have a pretty broad range of currencies losing ground at the moment. It was after we had a poor session in Asia, and that flowed on into Europe and the US and risk appetite in general was very weak," Westpac senior currency strategist Sean Callow said.
"There was a real flight to safety. The Swiss franc rose 1.6 per cent over the day, which is actually more than the Turkish lira or the Chilean peso fell. There was a bigger move into the franc than there was out of the lira. The Japanese yen was also very strong."
Australian dollar an 'insurance premium' against China risk
Fears about a slowing in Chinese growth have added to concerns about tightening monetary conditions and financial stress in the country.
Traders could be holding short positions on the Australian dollar as a "low-risk insurance premium against a bigger financial stress event in China", RBS senior currency strategist Greg Gibbs said. The short positions mean investors expect the local currency to decline further from its current levels.
"The Australian dollar is a risk proxy for China and is exhibiting evidence that fears remain high," Mr Gibbs said in a note.
"Even if the risk of financial crisis does not materialise, the market believes that efforts by China to contain credit growth and deal with structural excesses are likely to keep Chinese growth and demand for commodities on a downward trend, so it sees little upside risk for the Australian dollar."
It's a classic risk-off jittery session, with a lot of concern about emerging markets spilling over into Aussie
Flight from risk
The Argentinian peso fell almost 14 per cent against the US dollar, before recovering slightly after its central bank reportedly intervened in foreign exchange markets. The country's central bank had scaled back its intervention moves to perserve its reserves.
The Turkish lira lost almost 1.5 per cent of its value overnight, while the Chilean Peso shed 1.25 per cent and the Brazilian Real and South African rand slipped 1.1 per cent.
Gold was up 2.2 per cent as investors returned to the safe haven asset. Bonds were back in favour. Yields on 10-year US Treasuries fell to 2.8 per cent, their lowest levels in seven weeks. Yields on 10-year Australian government bonds followed suit and were fetching 4.1 per cent late Friday.
"It's a classic risk-off jittery session, with a lot of concern about emerging markets spilling over into Aussie," Mr Callow said.
"The Aussie is more vulnerable than the New Zealand dollar, which has support from the likelihood that RBNZ is going to increase interest rates in the next couple of months."
The soft Chinese data followed a series of other factors weighing down markets and the currencies of emerging economies.
Investors could also have been rattled by an early gauge of US manufacturing from financial data firm Markit, which suggested it had fallen to a three-month low this month, NAB co-head of currency strategy Ray Attrill said.
"There's been various pockets of stress. Although it looks like a broader [emerging markets] move, there are specific reasons why particularly emerging markets are getting sold," Mr Attrill said.
"To me, [the sell-off] looks a little bit overdone. It's pretty clear that the China data did reverberate offshore by more than we have seen [previously]."
Mr Callow said traders were to some extent using the concerns about Chinese growth to move out of riskier assets.
"I think it is a little bit of an excuse. I also don't think there is a deep understanding in the markets of the subtly of some of these releases. Our China economist was fairly dismissive [of the flash manufacturing figures] and he thinks it's just part of a gentle deceleration in growth for the most part," he said.
The Chinese figures also come before the Lunar New Year, which falls on January 31 this year. Chinese New Year traditionally marks a slower period of activity in the country.
"Anything that is reported for January and February is actually very prone to the impact of Lunar New Year," Mr Callow said.
"A lot of Chinese numbers aren't even reported for January or February individually. They wait until the two months are complete, then they report the two of them together. That's how distorted the numbers are."
At the same time, countries like Argentina and Turkey have already been facing internal struggles. The Argentine peso fell to levels it has not seen since its 2002 financial crisis overnight after the country's government said it would stop supporting its weakening currency to protect the dwindling levels of its reserves.
Official government figures have shown that Argentina's inflation soared by about 10 per cent in the year to November. But analysts said the jump in consumer prices could be running at twice that level.
In Turkey, an intervention by the central bank in currency markets overnight failed to stop the slide in the lira. Earlier this week, the central bank kept interest rates on hold despite rising inflation and a lower exchange rate. The Turkish lira fell more than 17 per cent against the US dollar last year, while the government has been caught up in a deepening political crisis.
US debt ceiling stoush: will it return?
Meanwhile in the US, the Republicans and Democrats appeared to be readying for another battle over the debt ceiling next month. The Speaker of the US House of Representatives, John Boehner, said this week that a "clean" debt ceiling increase - a bill with no conditions attached - would not pass the legislative chamber.
His comments came as US Treasury Secretary Jacob Lew called on Congress to lift the debt limit by February 7, saying the government department could run out of measures to pay its debt by the end of next month.
"We may be headed for another debt ceiling fight, which would certainly threaten, temporarily at least, this more positive growth momentum in the US," Mr Attrill said.
"So there's a risk factor there which I think may become more prominent in the next few weeks."