Australian Dollar Rises on Official Comments

The Australian dollar had a sharp rally today versus most of the 16 main traded currencies after a government official made positive comments regarding the future outlook of the Australian economy, creating speculations that interest rates will be hiked further in the South Pacific nation.

After the Reserve Bank of Australia Deputy Governor Ric Battellino affirmed on a statement that the Australian economy entered a “new uprising”, stocks in the nation jumped, attracting also currency traders to bring more capital flows to the South Pacific region as Australia has been the first country to start a new series of interest rate hikes which is likely to be extended as the economy continues to produce favorable figures, necessary for the government to rise borrowing costs in a controlled and “safe” manner. Low-yielding currencies were the biggest losers versus the Australian dollar today as risk appetite remained strong for the past 24 hours, affecting mostly the U.S. dollar and the Japanese yen.

Australia’s central bank is very likely to raise interest rates in 25 basis points next week, and the comments today ratify this hypothesis, according to most analysts. Due to its commodity export profile and not so lending-orientated financial system, Australia has been extremely resilient to cope with the crisis and the Aussie is likely to profit from this even further.

AUD/USD traded at 0.9295 as of 11:38 GMT from a previous rate of 0.9184 in the intraday. AUD/JPY traded at 81.41 from 81.12.

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