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Australian central bank intervenes as dollar falls

Australian central bank intervenes as dollar falls

Australia's central bank intervened yesterday to prop up the local dollar after it plunged 3.7 percent against the greenback as investors turned it into the whipping boy of the global financial crisis.
The rare intervention by the central bank was aimed at adding liquidity "in an illiquid market," a Reserve Bank of Australia (RBA) spokesman said.
The Aussie was trading at 0.6194 to the greenback at midday (0100 GMT), down nearly US$0.02 from Friday's domestic close of 0.6388, after hitting a five-year low of 0.6060 in U.S. weekend trade, its weakest since April 15, 2003.
Traders could not estimate how much the central bank purchased to support the local unit, but said that relatively small amounts would have sufficed given the very tight liquidity in the market.
"The RBA has essentially shown their hand in the low 0.60s to the U.S. dollar for the Australian dollar, and one might presume they are in a mind to install a sense of stability for the currency at least for the near term," said Greg Gibbs, senior currency strategist at ABN AMRO.
Investors worried that the financial turmoil is deepening are dumping the high-yielding Aussie fast, extending its losses against the strengthening U.S. unit to 37 percent since July, when it threatened parity with the U.S. dollar.
"It is carrying some of the weight of this global financial crisis, there's no doubt about that," Australian Treasurer Wayne Swan said yesterday of the unit's dizzying fall from a high of 0.9849 in mid July.
But even as the dollar sent the prices of imported goods and overseas travel skyrocketing for Australians, Swan said the weaker currency would help exporters and tourism.


Updated : 2021-03-05 18:55 GMT+08:00