Australian Dollar Declines


The Australian dollar fell from close to a three-month high on speculation its 3.5 percent gain the past month is excessive given concerns slowing global economic growth will damp demand for the nation's exports.

The currency ended a two-day winning streak before a U.S. report on Feb. 20 that is forecast by economists to show housing starts remained near a 16-year low in January, raising concern the deepest housing recession in a quarter of a century will weigh on global growth. Exports of iron ore and other raw materials used in buildings contribute about 17 percent to Australia's economy.

The Australian dollar bought 90.81 U.S. cents as of 9:04 a.m. in Sydney, compared with 90.92 cents in New York late on Feb. 15 when it reached 90.97, the highest since a three-month peak of 91.01 cents on Feb. 4.

Futures traders increased their wagers that the Australian dollar will gain, figures from the Washington-based Commodity Futures Trading Commission showed on Feb. 15.

The Australian dollar is the best performer among the 16 most traded currencies in the past month on speculation domestic growth and inflationary pressures will spur the central bank to raise interest rates as soon as next month.

Reserve Bank of Australia Governor Glenn Stevens and his board will boost the overnight cash rate target by a quarter point to 7.25 percent on March 4, adding to increases this month, in November and August, according to 22 of 24 economists surveyed by Bloomberg News.


TradingEconomics.com, Bloomberg
2/17/2008 4:12:36 PM