SINGAPORE (BLOOMBERG) - Panic reigned in currency markets on Monday (March 9) as orders from traders and algorithmic machines snowballed to spur some of the biggest moves since the global financial crisis.

As markets reopened after a weekend filled with crisis headlines, the yen soared to approach the key 100 level against the greenback. Risk and commodity currencies from Australia to Norway and Mexico all plunged within the first few hours of trading.

"Markets are screaming that there is a pending recession," said Mr Stephen Miller, adviser at GSFM, a unit of Canada's CI Financial Group. "People can't seem to get enough of the likes of yen and gold, and dumping the Aussie and commodity currencies that are vulnerable to global growth risks."

The Singapore dollar was relatively unscathed, trading down 0.5 per cent to the US dollar at 1.3851 as of 4:38pm Singapore time.

Investors are taking cover in the safest assets as the collapse in crude prices adds to the risk to the global economy from the spreading coronavirus outbreak. Italy locked down part of the country over the weekend, reinforcing the growing concern about the virus.

Crude prices dived more than 30 per cent at one point with the breakdown of the relationship between Saudi Arabia and Russia expected to lead to far-reaching economic consequences. That sent oil-exporting currencies such as the Norwegian krone and the Canadian dollar plunging from the start of trading on Monday.

The widespread selling of more than a dozen currencies erased any benefits that the Federal Reserve's emergency rate cut last week had engineered. Traders say clients were rushing to take risk bets off the table.

LIQUIDITY HUNT

Algorithmic machines sold the Australian and New Zealand across multiple bank platforms in a desperate hunt for liquidity, traders said. It drove Treasuries to new highs, with the entire yield curve already trading under 1 per cent.

The Australian dollar plunged by almost 5 per cent, the biggest one-day decline since 2008, to as low as 0.6313 against the greenback. The kiwi fell by more than 5 per cent to its weakest since May 2009. The yen soared more than 3 per cent to 101.57, approaching the 100 level that traders speculate could prompt the Bank of Japan to intervene.

Traders were caught out.

A Sydney-based investor bought the Aussie at 0.6450 per dollar before stop-loss orders were triggered at 0.6350. The result: a US$50,000 (S$69,000) loss within seconds.

"This looks to be a repeat of the Jan 3 flash crash," said Mr Stuart Simmons, senior portfolio manager at QIC, referring to the sell-off in the yen in early 2019. "When they start triggering stop losses, the currencies end up cascading on themselves - there are no circuit breakers. Price action turns dysfunctional."

A Japanese finance ministry official said the government is monitoring markets with a sense of urgency. Officials from Japan's central bank, Finance Ministry and Financial Services Agency will meet at 3.30pm in Tokyo to discuss global financial markets.

"The yen's surge won't stop unless Japanese authorities start to talk it down," said Mr Masakazu Satou, a currency adviser at retail FX brokerage Gaitame Online in Tokyo. "The market is very concerned over the spreading of the virus in the US - the yen's uptrend will pick up momentum if it breaks through 100 against the dollar."

PAIN TRADE

The pain was even greater for emerging-market currencies.

Mexico's peso slid more than 8 per cent against the US dollar to the weakest in more than three years, while the South African rand slumped 7.8 per cent.

"The mantra now is take any risk off the table," said Mr Tsutomu Soma, a bond trader at Monex in Tokyo. "Misfortunes seldom come singly is how it feels right now."

Monday's yen surge also wrong-footed Japanese retail investors .

The currency surged to all-time highs against the rand and Mexican peso, two favoured currencies among Japanese retail punters. That is after margin accounts just last week boosted their net long positions on these currencies to the highest level since at least December, according to the latest data from the Tokyo Financial Exchange.

"Markets are in a sort of a panic, with selling inviting further selling," said Mr Kengo Suzuki, chief foreign-exchange strategist at Mizuho Securities in Tokyo. "Speculative moves are the biggest driver. Fears are growing and it's not over yet."