The Australian dollar sank today after the central bank kept its key interest rate unchanged, but maintained dovish bias. The currency pared losses versus the Japanese yen, but stayed soft versus the US dollar and the Great Britain pound.
As was expected, the Reserve Bank of Australia left its cash rate unchanged at 2.75 percent. The bank voiced concern about the strength of the currency and hoped that it will fall even more:
The Australian dollar has depreciated by around 10 per cent since early April, although it remains at a high level. It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy.
What is even more important, the central bank kept its stance toward interest rate cuts:
The Board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand.
The Aussie reached the lowest level since August 2010 against the US currency yesterday and may yet reach new lows today.
AUD/USD fell from 0.9235 to 0.9146 as of 16:37 GMT today. EUR/AUD went up from 1.4134 to 1.4226 and its daily high was at 1.4271. AUD/JPY slipped from 92.01 to 91.28, but rebounded to 92.08 later.
If you have any questions, comments or opinions regarding the Australian Dollar,
feel free to post them using the commentary form below.
Be First to Comment