The Australian Dollar fell to its lowest level in 20-months due to rising fears that an economic slump could be just around the corner and as the International Monetary Fund downgraded China’s growth outlook.
A slowdown in Australia’s mining boom has been on the cards for awhile but only recently have mining and energy firms begun to trim spending across the country. According to the Pacific Investment Management company Pimco such a slowdown would leave a ‘significant economic hole in the short term that needs to be filled’.
Adding to the ‘Aussie’s’ weakness was the IMF decision to cut its forecasts for growth in China, Australia’s biggest trading partner. Expansion will be about 7.75% this year and next, David Lipton first deputy managing director of the IMF, said today at a press briefing in Beijing after concluding an annual review. In April, the IMF forecast growth of 8% this year and 8.2% expansion in 2014.
The Australian currency now looks set to weaken further in the long term as ANZ, one of Australia’s biggest banks downgraded its expectations for the ‘Aussie’. A decline will be a good thing for exporters who have moaned recently that the exchange rate was too high.
RBS currency strategist Greg Gibbs in Singapore said the tide had turned for the Aussie, with further selling likely.
“It is also possible that now the dam wall has been broken, there is a lot of built-up tension still to be released,” he said.
“Once thought impregnable, the Australian dollar suddenly looks vulnerable as the market focuses in on the retreating resources sector, improving US economy and weakening sentiment in China.”
Current Australian Dollar (AUD) Exchange Rates
The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9569
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7430
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6356
The Australian Dollar/ New Zealand Dollar Exchange Rate is currently in the region of: 1.1858
The US Dollar/Australian Dollar Exchange Rate is currently in the region of: 1.0450
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.3459
The Pound Sterling /Australian Dollar Exchange Rate is currently in the region of: 1.5732
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.8433
(Correct as of 10:45 am GMT)
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