Australian Dollar Falls

The Australian dollar fell from near a 25-year high against the U.S. currency as the prices of commodities the nation exports dropped.

The currency erased this week's gains as the price of gold, Australia's third-most valuable export, declined the most in four weeks and the UBS Bloomberg Constant Maturity Commodity Index dropped 1 percent. Exports of raw materials contribute about 17 percent to Australia's economy.

The Australian dollar declined to 95.66 U.S. cents as of 10:35 a.m. in Sydney from 96.16 cents late in Asia yesterday and from a 25-year high of 96.54 cents reached May 22. It will fall to 90 cents in six months, Pontikis said.

The currency fell as gold futures for June delivery dropped as much as 1.9 percent yesterday on the Comex division of the New York Mercantile Exchange, the biggest percentage decline for a most-active contract since April 29.

Investors should end bets the Australian dollar will gain against the U.S. currency because of an increase in risk aversion and the likelihood a government report next month will show economic growth is slowing, Bank of America Corp. says.

Australian Dollar Falls, Bloomberg
5/27/2008 7:41:03 PM