The Australian dollar is lower amid concerns about an apparent increase in bad debt in China.

At 0700 AEDT on Thursday, the local unit was trading at 96.29 US cents, down from 96.53 cents on Wednesday.

BK Asset Management MD Kathy Lien said safe-haven currencies rallied and riskier assets like the Australian dollar have lost ground in the past 12 hours.

“Both the US dollar and Japanese yen caught a safe-haven bid this morning on news that China wrote off three times more bad loans in the first half of the year,” she said.

“Investors are looking at the increase as a big red flag for Asia’s largest economy and while it reveals some of the country’s deeper problems, the write-offs are also part of the new government’s overall strategy to clean up their books and bring default ratios to international standards.”

Before the Chinese debt report was released on Wednesday, the Australian dollar had peaked at a five-month high of 97.58 US cents following the release of higher-than-expected September quarter inflation figures.

On Thursday, HSBC will release Chinese manufacturing data for October, which will be of interest to Australian investors.

AAP