RBA Maintains Interest Rates, AUD/USD Falls

The Australian dollar fell against its US counterpart, rose versus the euro and was little changed against the Japanese yen after the nation’s central bank kept its interest rates unchanged and the trade balance surplus increased.

The Reserve Bank of Australia kept its benchmark Cash Rate at 4.75 percent. RBA Governor Glenn Stevens said in his statement after the decision:

A gradual recovery from the floods and cyclones over the summer is taking place, though the resumption of coal production in flooded mines continues to proceed more slowly than initially expected. The recovery will boost output over the months ahead, and there will also be a mild boost to demand from the broader rebuilding efforts as they get under way, but growth through 2011 is now unlikely to be as strong as earlier forecast. Over the medium term, overall growth is still likely to be at trend or higher, if the world economy grows as expected.

Despite the Governor’s negative outlook for short-term economic growth, Australia’s trade balance surplus increased more than expected in May. The surplus was A$2.33 billion in May, compared to the April surplus of A$1.62 billion. The expected reading was A$1.91 billion.

AUD/USD dropped from 1.0731 to 1.0682 as of 23:58 GMT today after reaching the intraday low of 1.0663. EUR/AUD fell from 1.3540 to 1.3500. Meanwhile, AUD/JPY traded near 86.53 after opening at 86.71.

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