As Australia's sharemaket and currency were being battered today in the wake of the Lehman Brothers collapse, Prime Minister Kevin Rudd insisted the country's economy remained strong.
Rudd acknowledged the financial crisis that caused its collapse was deepening but expressed confidence Australia could weather the storm.
"We are in a period of global financial crisis, which has been running now since last year and it has become more intense," he told reporters.
"In Australia, we are in a strong set of circumstances. The government has a responsible policy of economic management to see Australia through these challenging economic times."
But his assurances fell on deaf ears as the Australian share market suffered heavy losses amid fears Lehman's failure may drag down other US firms and send shock waves through the world economy.
Australia's benchmark S&P/ASX200 share index was down 2.6 per cent by midday today, more than 30 per cent below its record high of November last year, while the local currency plummeted more than 2.2 US cents to 79.38 US cents. In Melbourne, Lehman Brothers Australia's local office stood empty, with the future of its 130 employees in limbo.
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Despite the carnage, Aequs Securities institutional dealer Ric Klusman said the impact on Australian markets could have been worse.
"We're doing pretty well really," he said.
"Don't forget that we have fallen close to ten per cent in the last week, so we've already built a lot of this in."