The Australian dollar has hit a two week high, after the Reserve Bank signalled it would not change the cash rate in the foreseeable future.

At 0700 AEDT on Wednesday, the local unit was trading at 88.19 US cents, up from 87.72 cents on Tuesday.

Early on Wednesday morning, it peaked at 88.34 US cents, its highest level since September 25.

The Reserve Bank said, after its board meeting on Tuesday, that it still considered the Australian dollar to be too high despite falling six per cent in September and maintained its stance that its interest rate will remain on hold for some time to come.

BK Asset Management MD, Boris Schlossberg, said the Australian dollar steadily climbed after the RBA statement and broke the 88 US cents market before the start of European trade.

“The RBA left its benchmark rate unchanged and reiterated most of its points noting that the currency remains high by historical standards and inflation is expected to be consistent with target,” he said.

“After a near five per cent decline since the last RBA meeting, the Aussie appears to have stabilised as it found bids from yield hungry bargain hunters over the past week.

“The net takeaway from (the) RBA statement is that the central bank is likely to remain resolutely neutral for the foreseeable future and that should keep the currency relatively well bid as its yield remains the highest in the G20.”

On Wednesday, markets will focus on the release of the Westpac/Melbourne Institute Survey of Consumer Sentiment for October.

AAP

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