By Candice Zachariahs Oct. 16 (Bloomberg) -- The Australian and New Zealand dollars fell the most since Oct. 8, when they plunged to five- year lows versus the greenback, as equities and commodities tumbled on concern the world is sliding into recession. The currencies fell a second day against the U.S. dollar and Japan's yen as the UBS Bloomberg Constant Maturity Commodity index of 26 raw materials lost 4.7 percent. U.S. stocks slid the most since the 1987 crash, hammered by the biggest retail sales drop in three years. Raw materials make up 60 percent of Australia's exports and 70 percent of New Zealand's. ``Sentiment is pretty bad on the Australian dollar,'' said Richard Grace, chief currency strategist at Commonwealth Bank of Australia in Sydney. ``The unavoidable recession in the U.S., Europe and probably Japan suggests that downward pressure will remain on the Aussie dollar,'' he said, referring to the currency by its nickname. The Australian dollar dropped as much as 8 percent before trading at 67.34 U.S. cents as of 1:34 p.m. in Sydney, from 70.60 cents late in Asian trading yesterday. On Oct. 8, the Aussie plunged as much as 9.8 percent to a five-year low of 64.51. New Zealand's dollar slid 1.7 percent today to 61.31 cents from 62.38 cents. On Oct. 8 it touched 57.92 cents, also the lowest since 2003. Australia's dollar dropped 6.1 percent to 67.33 yen, from 71.67 yesterday. It touched 63.75 yen on Oct. 8, the weakest since 2002. New Zealand's currency was 3.2 percent lower at 61.33 yen. Commodities Tumble The Australian currency has plunged 31 percent against the greenback and 34 percent versus the yen over the past three months as commodity prices tumbled and the turmoil in financial markets prompted investors to dump higher-yielding assets. New Zealand's currency has declined 21 percent and 24.5 percent against the dollar and the yen, respectively. The South Pacific currencies pared losses as investors speculated they had weakened too rapidly. ``The market's caught itself a little short,'' said John Body, head of financial markets at ANZ National Bank Ltd. in Auckland. ``People are saying somewhere near 60 cents in the kiwi and 65 cents in the aussie there's compelling value,'' he said referring to the currencies by their nicknames. Body expects Australia's dollar to trade between 65 and 70 U.S. cents and New Zealand's between 60 and 64 cents over the next 24 hours. ``It's going to be volatile but I don't think we're directionally going anywhere,'' he said. BHP, Exxon The currencies slid as Melbourne-based BHP Billiton Ltd., the world's largest mining company, fell by the most in 21 years in trading today. Exxon Mobil Corp. and Chevron Corp. tumbled yesterday after commodity prices declined in New York trading on concern slowing economies will hurt demand. Crude oil, Australia's fourth most-valuable commodity export, fell below $75 for the first time in more than a year. The Australian and New Zealand dollars also declined as the VIX volatility index, a Chicago Board Options Exchange gauge reflecting expectations for stock market price changes and a barometer of risk aversion, rose to near a record yesterday. Australian government bonds rose for the third day. The yield on the benchmark 10-year note fell 9 basis points to 5.280 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 advanced 0.737, or A$7.37 per A$1,000 face amount, to 99.757. A basis point is 0.01 percentage point. New Zealand's two-year swap rate, a fixed payment made to receive floating rates, fell to 6.338 percent today from 6.425 yesterday. To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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