The AUD falls Against Yen and Dollar as RBA Leaves Interest Rate Unchanged

By TraderVox.com

Tradervox (Dublin) – The Australian dollar declined to a two-week low against the yen and the dollar after the Reserve Bank of Australia left the interest rate unchanged. The officials indicated that they would change the interest rate if the need arises in the future. Apart from this announcement from the Reserve Bank of Australia, the Aussie also declined due to concerns about the Europe’s debt crisis.

Some analysts are estimating that the crisis might weigh on global economic growth. The other South Pacific currency –the Kiwi, touched a month’s low after data showed that the country’s budget deficit widened more than it had been estimated.

According to a Singaporean Currency Strategist at Forecast Pte, the RBA has kept an easing bias which is seen as a more dovish move than it had been expected. He added that the move may result to further decline of the Australian dollar.

The Australian dollar weakened against the US dollar by 0.4 percent to settle at $1.0624 after it had declined to $1.0604 which is the lowest it has been since February 23. Against the yen, the Australian dollar pared 0.7 percent to settle at 86.43 yen after falling 0.9 percent yesterday. The New Zealand dollar fell to 81.33 US cents which is the weakest it has been since January 25.

Later in the day the Kiwi rose to 81.54 US cents which is 0.7 percent lower than yesterday’s close. The kiwi declined against the yen to touch 66.31 yen after it had traded at 66.18 earlier in the day. This is the lowest it has been since February 20.

Some analysts had correctly estimated that the Reserve Bank of Australia would leave the overnight cash rate target at 4.25 percent. And this was confirmed today by the RBA Governor Glen Stevens who announced this decision in a statement today. The statement also indicated that the while the RBA settings are appropriate for now, there is scope for easier policy if demand weakens.

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