The Japanese currency also slid from a six-month high against the dollar as Iceland took control of it's second- biggest lender and said it's negotiating an emergency loan from Russia. The yen declined earlier after the Reserve Bank of Australia lowered interest rates by the most since 1992.
The yen traded at 139.02 per euro as of 8:21 a.m. in New York, from 137.50 yesterday, when it touched 135.05, the strongest since September 2005. Japan's currency was at 102.08 per dollar from 101.82. The euro was at $1.362 from $1.3499. It touched $1.3444 yesterday, the lowest since August 2007, when the credit crisis started to gain momentum.
The British pound fell to the lowest level in 2 1/2 years against the dollar after a report showed U.K. factory production contracted for a sixth month in August, fueling speculation the economy is already in a recession. The pound slipped to as low as $1.7319, the weakest since March 2006, and was at $1.750 by 8.26 a.m. in New York, from $1.7441 yesterday. It also fell to 77.8 pence per euro, from 77.41 pence.
The Australian dollar pared losses, climbing from a four-year low, as the central bank's biggest interest-rate cut since 1992 prompted speculation policy makers worldwide will slash borrowing costs to revive credit markets. The Australian dollar, also known as the aussie, traded at 72.3 U.S. cents as of 8:21 a.m. in New York, after dropping earlier to 69.9 cents, the weakest since September 2004.
New Zealand dollar plunged to five-year lows against the yen as frozen credit markets heightened concern global economic growth will slump, spurring investors to dump higher-yielding assets. The currency fell to 61.77 U.S. cents, the lowest since August 2006, before trading at 63.6 cents.
India's rupee fell past 48 per dollar for the first time in more than five years on concern a global stock rout will spur investors to take money out of local shares. The rupee fell as much as 0.4 percent to 48.02 per dollar, the lowest since January 2003, before trading at 47.97 as of 11:40 a.m. in Mumbai, according to data compiled by Bloomberg.
Chinese yuan rose the most in seven months, erasing a record loss posted in the run-up to last week's break in trading, after the central bank said it wants a stable currency. The currency rose 0.38 percent to 6.8169 a dollar as of 5:30 p.m. in Shanghai, according to the China Foreign Exchange Trade System.