Australian Dollar Declines

The Australian dollar fell for a second day after a government report showed wage growth unexpectedly slowed last quarter, increasing concern economic growth is easing., Bloomberg 5/14/2008 6:13:49 AM

Australia's currency slid the most in two weeks as the Bureau of Statistics report spurred speculation the central bank will refrain from raising interest rates again this year.

The Australian dollar weakened to 93.33 U.S. cents as of 5:43 p.m. in Sydney, compared with 94.20 immediately before the wage report and 94.06 cents in late Asian trading yesterday.

Hourly rates of pay excluding bonuses gained 0.9 percent in the first quarter from the previous three months, when they rose 1.1 percent, the statistics bureau said in Sydney.

Australia's currency extended losses during the past week to 1.5 percent. The odds the RBA will raise its 7.25 percent benchmark rate at the June 3 meeting fell to 2 percent from 10 percent at the start of the month, according to a Credit Suisse Group index based on trading of interest-rate swaps.

Gains in the Australian dollar were tempered after Treasurer Wayne Swan yesterday forecast a record surplus when he delivered a budget he said would ``take pressure off the Reserve Bank'' in its fight against inflation.

The budget surplus will swell to a record A$21.7 billion ($20.4 billion) in the year to June 30, 2009, or 1.8 percent of gross domestic product. That's more than the A$20 billion median estimate of 21 economists surveyed by Bloomberg. This fiscal year's surplus is forecast to be A$16.8 billion.

Australian Dollar Declines