Aussie dollar falls below greenback parity

The Australian dollar on Friday dropped below greenback parity for the first time since October 12 as traders exit high-risk currencies amid fears about the eurozone debt crisis. The "Aussie" fell as low as 99.70 US cents overnight, from 101.04 on Thursday, but recovered slightly to be trading at 99.78 by 0645 GMT. GFT Forex director of currency research Kathy Lien said there had been an exodus out of high-risk, high-yield currencies, like the Australian dollar in the past week. "This weakness in the Aussie has all to do with the continued tensions in the eurozone," Lien said. The Australian dollar first breached parity in October last year and consistently rallied near or above the US$1.00 mark for months, hitting a record of 110.81 US cents in July. It retreated briefly in the immediate aftermath of Japan's quake and nuclear crisis before again dropping below US$1.00 on August 9 following Standard & Poor's downgrade of the United States. It dipped back below the greenback in September and again on October 12 before recovering. Lien said eurozone worries would continue to dominate market sentiment. "Everything else will just be a sideshow to Europe and there's a possibility the Aussie dollar could pass 98 (US) cents in the near future," she said. CMC foreign exchange dealer Tim Waterer agreed that the Aussie would stay below parity if the negative sentiment from Europe persisted. "If we see, next week, a continuation of this trend in equity market weakness we could see the currency heading back in that direction of 97.50 US cents in the next week," he said.