The Australian Dollar exchange rate has weakened after Australia’s Prime Minister Julia Gillard put pressure onto the nation’s Reserve Bank to cut rates and bring the currency’s strength under control.
“We cannot control a number of factors that have kept our dollar strong, like the weakness in the global economy, the close-to-zero interest rates of many nations and the increasing view that Australia is something of a safe haven,” Ms. Gillard will say, according to extracts of a speech she is scheduled to deliver later Wednesday in Canberra.
The Prime Ministers speech will put pressure on the bank to cut rates again in a bid to weaken the currency and lessen the harm being done to the nation’s exports, manufacturing and retail sectors. The Reserve Bank of Australia is due to hold their next policy meeting on the 5th of February and is expected to take measures dampen demand for the currency. Currently interest rates in the country remain at 3% a figure that is considered high when compared with other developed nations.
It is thought some members of the bank’s board want to take more aggressive action to curb the currency’s strength with one saying that more ‘active management’ is required to limit the impact of a strong currency.
Many nations have, or are planning to take action to weaken their currencies, increasing the chance of a currency war. Already Japan has taken action to weaken the Yen.
The Australian Dollar to Euro exchange rate is currently trading at 0.7716
The Australian Dollar to Pound exchange rate is currently trading at 0.6629
The Australian Dollar to US Dollar exchange rate is currently trading at 1.0442
The Pound to Australian Dollar exchange rate is currently trading at 1.508
The Euro to Australian Dollar exchange rate is currently trading at 1.2957
The US Dollar to Australian Dollar exchange rate is currently trading at 0.9578