Asian and Australian equity markets plunged and so did the Australian Dollar, which closed lower on Monday. At about 17:00 AEDT, the country's currency was trading at $US0.8856/59, a substantial fall as compared to Friday's close of $US0.8885/89.

The development put a halt to the progress of local and regional equity markets in Asia, which failed to match the performance on Wall Street.

HiFX senior consultant Tom Averill has stressed that the fall can be attributed to the fact that investors and traders are being much cautious ahead of the festive season. "I don't think anybody is looking to take on any new risk until we get into the New Year. As a consequence of that, the Aussie is going to continue to be under pressure really until the early part of January", he said.

Tim Waterer, CMC Markets foreign exchange dealer, commented that despite of gold rising, the currency declined, which could be another sign of the investors' cautious approach.

Gold in Sydney was at $US1113.50 per fine ounce, up by $US7.57 or 0.68 per cent and the closing price was$US1105.93.

"It has fluctuated around 10 pips either side of 89 (US) cents for much of the morning',' Mr Waterer said. Forecasts have been made for dollar, which will supposedly trade at $US0.8870 and $US0.8930.