Just a few weeks ago the Australian dollar seemed set in the US93c range, much to the frustration of the Reserve Bank.
Last night the dollar crashed below the 88c mark and now sits at an eight-month low.
In early trade Friday morning, the local currency was trading at 87.87 US cents, down from 88.05 cents on Thursday.
The currency fell as low as 87.74 US cents overnight, its lowest level since February 4, following comments from New Zealand’s Reserve Bank that sparked a fall in the trans Tasman currency.
The bank’s governor, Graeme Wheeler, said the NZ dollar’s strength was “unjustified and unsustainable” given the decline in commodity prices.
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The comments sent the kiwi tumbling, dragging the Australian dollar with it.
“It is the dramatic move lower in the NZ dollar that is the standout story in foreign exchange of the past 24 hours,” National Australian Bank global co-head of FX strategy Ray Attrill said.
“(The moves were) sparked by the RBNZ’s aggressive outpouring of angst at the `unjustified and unsustainable’ level of the currency, which inflicted some collateral damage on the Australian dollar.”
Australia’s Reserve Bank would be equally pleased that the pressure from a high dollar might be finally easing.
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