Australian, N.Z. Dollars Slide on RBA Minutes, Europe Concerns


Staff member
Nov 30, 2008
The Australian dollar slid as the central bank said record-low interest rates will take time to revive economic growth, giving policy makers more room to lower interest rates.

Australia’s and New Zealand’s currencies fell to the lowest in more than a week as the euro dropped to a 2 1/2-month low after Moody’s Investors Service said banks with units in eastern Europe may face rating downgrades. Bonds in Australia rallied, signaling renewed concerns global growth may erode the yield premium the South Pacific nations’ offer investors who buy their assets with low-cost funds.

“Anything which is a higher-risk currency or relies on yield to provide support is going to be under steep pressure,” said Greg Gibbs, director of foreign-exchange strategy at ABN Amro Australia Ltd. in Sydney. The Australian currency is in “real trouble of heading sharply lower” and could slide towards 62.50 cents, Gibbs said.

Australia’s currency fell 1.1 percent to 64.27 U.S. cents as of 4:25 p.m. in Sydney from late in Asia yesterday. The currency slipped 0.3 percent to 59.39 yen. New Zealand’s dollar declined 1.4 percent to 51.18 cents and 0.6 percent to 47.32 yen.

From Bloomberg News.