The Australian dollar was lower at noon as investors abandoned the high-yielding currency after heavy falls on local and overseas equity markets and ahead of a meeting of world leaders in Washington on the weekend.
At 1200 AEDT, the Australian dollar was trading at $US0.6660/68, down about 2.6 US cents from Thursday's close of $US0.6922/27.
During the morning, the local currency traded between a low of $US0.6618 and a high of $US0.6880.
The Australian dollar touched $US0.7100 during overnight trading, but backtracked dramatically in the 90 minutes before the start of the local session to open at $US0.6841/46 at 0700 AEDT.
The local currency's decline was in line with a sharp sell-off in US equity markets, where the major indices fell to their lowest levels in five years.
Easy Forex senior dealer Francisco Solar said continued weakness on stock markets throughout Asia Friday morning added to already extreme risk aversion.
"This is purely fear driving the market," Mr Solar said.
"It would be a brave man trying to pick the bottom in this type of market."
At 1200 AEDT, the Australian stock market was down more than six per cent, while the Nikkei index in Tokyo had slipped about ten per cent.
Reflecting the poor appetite for risk, the Australian dollar was down against the yen, too.
At 1200 AEDT, the currency was trading at 65.79/88 yen, down almost four yen from Thursday's local close of 69.51/58 yen.
Investors were ditching riskier assets ahead of this weekend's Group of Seven (G7) meeting in Washington, Mr Solar said, which was another negative for the Australian dollar.
"The weekend is a risk event," Mr Solar said.
"They could come out with some sort of a joint agreement and the markets may not like it at all come Monday and we might have a continued sell-off.
"Unfortunately, at these times, the Aussie does get sold off when there are high levels of risk aversion."
At 1200 AEDT, the Reserve Bank of Australia's trade weighted index (TWI) was at 54.1, down from Thursday's close of 56.0.
Meanwhile, the Australian bond market was stronger at noon.
At 1200 AEDT, the yield on the Commonwealth Government March 2019 bond was at 5.013 per cent, down from Thursday's close of 5.105 per cent, while the June 2011 bond was at 4.155 per cent, down from 4.388 per cent.
On the Sydney Futures Exchange, the December 10-year bond futures contract was at 94.970, up from Thursday's close of 94.890, while the December three-year contract was at 95.725, up from Thursday's close of 95.515.
