The Australian Dollar tumbled to a three year low against the Pound and hit a three-month low against the US Dollar after the governor of the Reserve Bank of Australia Glenn Stevens talked down the currency.
The currency tumbled after Governor Stevens hinted that a possible intervention in the currency markets by the Central Bank is not being ruled out. Speaking to an audience of economists and journalists the governor knew that his comments would be reported straight away. His plan to weaken the ‘Aussie’ worked as it plummeted against all of its peers shortly after.
“Our position has long been and it remains that intervention can, in the right circumstances, judiciously used, be effective and useful. It can’t make up for policy weakness in other areas and it can’t really stand against fundamentals but subject to those conditions, if it works with fundamentals, it can be effective and so it remains part of our toolkit. That doesn’t mean we will always eschew intervention,” Stevens said.
The RBA governor timed his comments perfectly and it worked a treat as the currency fell. The RBA has wanted the ‘Aussie’ to fall for some time as it sees its high strength as a threat to the nation’s tourism and manufacturing sectors. A lower ‘Aussie’ will always bolster exports and offset the economic impacts of the slowing mining boom.
The currency fell to a five year low against the New Zealand Dollar and is on course to make its longest run of weekly declines against the US Dollar in seven years following the comments.
Uncertainty as to when the US Federal Reserve will cut its quantitative easing programme also weighed upon the ‘Aussie’ as investors opted for safer currencies rather the riskier commodity based ones.
Sterling soared against its Australian peer after data showed the number of new orders for UK factories soared to an 18-year high and the nation’s budget deficit narrowed more than forecast. Demand for the Pound continues to be strong as economists predict that the UK economy is strengthening at a quicker pace than expected.
The New Zealand Dollar initially strengthened early in the session before falling. The currency hit a session high after a Reserve Bank of New Zealand policy maker said that they would like to see the ‘Kiwi’ weaken; it briefly did the opposite before softening as investors favoured less risky currencies.
Current Exchange Australian Dollar (AUD) Rates
The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9186
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.6798
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5671
The Australian Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.1191
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4710
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.7633
Current New Zealand Dollar (NZD) Exchange Rates
The New Zealand Dollar/US Dollar Exchange Rate is currently in the region of: 0.8209
The New Zealand Dollar /Euro Exchange Rate is currently in the region of: 0.6074
The New Zealand Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.5067
The New Zealand Dollar /Australian Dollar Exchange Rate is currently in the region of: 0.8935
The US Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.2181
The Pound Sterling/New Zealand Dollar Exchange Rate is currently in the region of: 1.9733
The Euro/ New Zealand Dollar Exchange Rate is currently in the region of: 1.6462
Correct as of 10:00 am GMT
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