Dollar hits two and a half month low

 

dollar,silver,coin,money,currencyThe Australian dollar dipped below 92 US cents for the first time in two and a half months after the head of the Reserve Bank said he has an open mind on intervening to get the exchange rate lower.

At 0700 AEDT on Friday, the local unit was trading at 92.21 US cents, down from 93.04 cents on Thursday.

In early morning trade, the Australian dollar fell as low as 91.99 US cents, its weakest level since September 9.

In a speech in Sydney on Thursday night RBA governor Glenn Stevens again said the high local currency is not helping the economy.

He did not rule out selling Australian dollars to buy foreign currency in order to weaken the exchange rate.

BK Asset Management MD Boris Schlossberg said the RBA governor has been frustrated that the stimulus policies of the bigger central banks have been keeping the Australian dollar unusually high.

“For the time being Mr Steven’s remarks appear to be exploratory in nature as he tempered his rhetoric by noting that intervention could carry significant costs and that he has not yet been convinced that it would be effective,” Schlossberg said.

“Yet he also stated that it is the long held view of the RBA that intervention can be useful if used judiciously.

“In short, Mr Steven’s remarks served to put the currency market on notice that the RBA is serious about using unorthodox means to lower the exchange rate.

“The Aussie tumbled in response.”

The Australian dollar has also been under pressure from weak Chinese manufacturing data for October, released on Thursday, and the US central bank October policy committee minutes indicating that a tapering of its massive bond purchase program could happen soon.

The Fed minutes has spark a rally in the US dollar against all the major currencies, since they were released early on Thursday morning.

In overnight trade, the greenback peak at a four-month high against the Japanese yen, and a one-week high against the euro.

AAP

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