Aussie dollar falls below greenback parity
SYDNEY: The commodities-linked Australian dollar Tuesday slumped below parity with the greenback for the first time since March, when it was rocked by the Japan earthquake.
The "Aussie" sank under US$1.00 shortly after noon Tuesday and was as low as 99.30 US cents by 12.20pm (0220 GMT), amid carnage on regional markets linked to the US debt downgrade by Standard & Poor's on Friday.
Since breaching parity with the greenback in October the Aussie has rallied consistently near or above the US$1.00 mark, retreating only briefly in the immediate aftermath of Japan's quake and nuclear crisis.
It hit a record of US$1.1081 just two weeks ago.
The unit has plunged 4.1 percent in local trade since Monday's close, and was tipped below parity by a 6.5 percent surge in Chinese inflation to its highest level in three years on soaring food costs.
China is Australia's major trading partner and the soaring inflation's potential to trigger social unrest and economic instability is likely to rattle policymakers and investors.
The Aussie is a risk-based currency and Bank of New Zealand currency strategist Mike Burrowes said it was hit badly by the global panic.
"We're seeing the safe-havens, like the US dollar, the Swiss franc and the Japanese yen all appreciate," Burrowes said.
"These risk aversion fears and concerns around the US debt downgrade are really underlying that -- concerns around global growth and a potential for global growth to slow in Asia."
Australia's central bank took the unusual step of commenting on financial markets Tuesday amid the steep falls in both the dollar and the stock market.
"The Reserve Bank is monitoring market developments closely with no strains evident in the money markets," a spokeswoman for the bank said.
"The Reserve Bank's market operations continue to be conducted as usual."
Copyright AFP (Agence France-Presse), 2011
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