Although the Reserve Bank of Australia’s decision to lower its benchmark rate was predicted by some economists, the market still experienced significant movement after the central bank issued its announcement.
The Australian Dollar exchange rate was trading in the region of 1.0191 against the US Dollar as of 10:00 am GMT
The RBA cut the benchmark rate by 0.25 per cent, to a record low of 2.75 per cent.
This decision marks the seventh rate cut since 2011. The central bank has cited a slowdown in the nation’s integral mining sector and a persistently strong currency as the primary factors influencing the rate cuts.
The ‘Aussie’, which has recently achieved historic highs against currency rivals including the Euro and Yen, has remained strong despite falling export prices for key commodities and lowered interest rates.
RBA Governor Glenn Stevens asserted that the central bank felt that ‘a further decline in the cash rate was appropriate to encourage sustainable growth in the economy. Recent data on prices confirm that inflation is consistent with the target and, if anything, a little lower than expected.’
Following the RBA’s announcement the Australian Dollar broadly weakened, briefly declining to 1.0181 against the US Dollar.
One currency strategist commented: ‘Parity is a possibility. But it’s hard to make the case for a materially lower Australian Dollar given what’s happening with liquidity conditions around the world.’
The commodity-driven ‘Aussie’ has been supported in recent weeks by the Bank of Japan’s decision to double its monthly bond purchases in an unprecedented attempt to end deflation.
While a steep decline in Australia’s AiG Performance of Construction Index also weighed on the South Pacific currency during the local session, robust trade data brightened Australia’s economic outlook.
A surge in iron ore and coal, key commodities, allowed Australia to post its first surplus since the close of 2011.
Although February’s deficit was negatively revised to 111 million Dollars, the nation recorded a surplus of 307 million Dollars in March.
In response to the news Kieran Davies, an economist with Barclays, noted: ‘All the signs are that commodity demand is still solid. It’s not as though the world is presenting an incredibly bearish vibe just now. The RBA cut is not enough to punch us below 1.0100 US Dollars.’
Current Australian Dollar (AUD) Exchange Rates
< Lower > Higher
The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 1.0191 <
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7791 <
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6566 <
The Australian Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.1995 <
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.9815 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.2822 >
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.5246 >
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.8331 >
(Correct as if 10:00 am GMT)
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