Australia's currency headed for a third weekly loss as speculation of falling interest rates pushed the two-year government bond yield down to the lowest since October 2006. The Australian dollar also declined after prices of commodities the nation exports such as crude oil slid this week because the outlook for global growth deteriorated.
Australia's dollar dropped to 90.06 U.S. cents, the lowest since March 24, before trading at 90.22 cents at 10:45 a.m. in Sydney, from 91.10 cents late in Asia yesterday. The currency slipped to 99.15 yen from 99.71 yen yesterday.
The Aussie fell 2.9 percent the past week after Reserve Bank Governor Glenn Stevens said Aug. 6 that slowing demand meant ``scope to move towards a less restrictive stance of monetary policy in the period ahead is increasing.''
A benchmark rate of 7.25 percent in Australia, compared with 0.5 percent in Japan and 2 percent in the U.S., has made the currency a favorite with investors looking to invest in higher- yielding assets.
The currency dropped this week along with the prices of gold and crude oil, Australia's third and fourth most-valuable exports.
Gold fell for a fifth straight session in New York yesterday, the longest losing streak since June 2007. Crude oil futures fell as low as $117.11 a barrel on Aug. 7, 20 percent below the July 11 record of $147.27. Commodity shipments contribute 17 percent to Australia's economy.