The Australian Dollar fell by more than 1% against the Pound and slid close to its weakest level in three years following comments made by Reserve Bank of Australia governor that the currency is likely to weaken further and that there’s still room to cut interest rates.
The ‘Aussie’ dropped against all 16 of its most traded peers as traders increased their bets that the Australian Central Bank will reduce its borrowing costs at its policy meeting due to be held next week on August the sixth. The RBA has maintained rates at the record low level of 2.75% for the past two months.
“Recent inflation data do not appear to have shifted” the RBA’s assessment that the outlook for prices may “afford some scope to ease policy further if needed to support demand,” Stevens said today in the text of a speech in Sydney. “The recent decline in the exchange rate seems to make sense from a macroeconomic perspective. It would not be a major surprise if a further decline occurred over time.”
Stevens’s comments have left investors in no doubt that the RBA has adopted a firm easing bias towards its monetary policy.
“Stevens said some things that the currency didn’t like, in terms of the prospects for a rate cut,” said Steven Barrow, the head of the Group-of-10 research at Standard Bank Plc. “The whole speech as quite negative and the market is pricing in a higher chance of a cut next week,”
The Australian Dollar is expected to decline further and could fall as low as 90 cents to the US Dollar later in the week.
Current Exchange Australian Dollar (AUD) Rates
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The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9068 <
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6832 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5910 <
The Australian Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.1344 <
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.1027 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4637 >
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.6919 >
Correct as of 14:35 pm GMT
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