The Australian dollar has bounced back after its fall following the Reserve Bank’s monetary policy statement expressing concern about the currency’s high value.
At 0700 AEDT on Wednesday, the local unit was trading at 94.93 US cents, up from 94.77 cents on Tuesday.
The RBA kept the cash rate on hold at 2.5 per cent on Tuesday but expressed concern about the persistently high Australian dollar.
The statement accompanying the decision said a lower currency was needed to rebalance growth in the economy, indicating another cash rate cut could be on the cards.
“The Aussie came under some selling pressure in the wake of the RBA statement which was considerably more dovish than the market expected,” BK Asset Management MD Boris Schlossberg said.
“Australian monetary officials are clearly frustrated with the high value of the Aussie, noting that it was `uncomfortably high’ and the message may have been simply an attempt to jawbone the currency lower.
“However, few market participants believe that the RBA will reduce rates further unless economic conditions deteriorate markedly and, therefore, the Aussie stabilised ahead of the 94.50 US cent level and remained relatively steady just below 95 cents as traders bet that the Australian economy will continue its steady growth trend.”
AAP