Biggest Day in Years for Currencies as Investors Flee Risk

Euro, yen surge; kiwi, aussie tumble

Traders in the $5.3 trillion-a-day foreign-exchange market were busy Monday.

New Zealand’s dollar plunged as much as 8.3 percent, the most in 30 years, pacing declines by currencies of resource-producing nations amid a global market selloff. On the flip side, haven currencies surged on concern China’s slowing economy will damp global growth, with the yen climbing the most since 2010.

The U.S. dollar fell as traders pushed out expectations for higher interest rates from the Federal Reserve. The daily range of the Bloomberg Dollar Spot index, which measures the difference, or spread, between its intraday highs and lows, rose to levels investors last saw regularly during the financial crisis seven years ago.

“You’re talking about sovereign currencies moving that much, you’re not talking about equities -- it’s quite unusual,” Peter Gorra, head of foreign-exchange trading in New York at BNP Paribas SA, said by phone. “The spreads are naturally going to reflect the illiquidity in the market.”

The only time this year the spread climbed this high was in March, when the Fed unexpectedly slashed its forecasts for interest rates and warned the dollar’s rise threatened U.S. growth.

Here’s the roundup.

New Zealand’s kiwi fell the most since December 1985 on an intraday basis, touching a six-year low versus the dollar.

The Australian dollar slumped as much as 3.6 percent, the most in five years, and traded at its lowest since 2009.

 

Canada’s currency touched a new 11-year low before rallying.

 The yen climbed as much as 4.7 percent, the most since May 2010, to its strongest this year.

 The euro rallied past $1.17 for the first time since January.

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