The Australian dollar steadied to trade at about $US1.05, but well down on the record $US1.108 reached last week. It was also buying 73.5 euro cents, 64.2 pence and 82.4 yen.
In Australia, the All Ordinaries lost $51 billion, taking the fall for the week to $100 billion, as the index plunged 4.2 per cent to 4169.7 points.
However, business leaders, economists and both sides of federal politics urged Australians not to panic. The Australian economy, which is linked closer to Asia than those of most Western countries, remained in a fundamentally strong position.
And, unlike Europe and the US, Australia has room to stimulate the economy if needed. They have plenty of ammunition,
"The Reserve Bank could cut rates to 3 per cent or even lower. The Government has the capacity to do fiscal stimulus again."
It was the biggest one-day fall in three years and took the index back to its level of July 2009.
Only two of the top 200 ASX-listed companies posted gains: education provider Navitas and taxi fare service Cabcharge.
Losses were recorded across the board with BHP Billiton shares down 4.8 per cent, Commonwealth Bank 2.7 per cent and Telstra 2.4 per cent.
However, Adelaide-based stockbrokers and financial planners Prescott Securities advised clients to remain calm and to concentrate on the underlying facts.
This month, Australian companies report their financial results and many will deliver big profits such as Rio Tinto's record $7.2 billion half-year, up 30 per cent, reported on Thursday.
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