Australia’s dollar dropped for the first time in four days on speculation China’s economic growth will slow, damping demand for the South Pacific nation’s exports.
The Aussie weakened versus the yen after reaching a 10-month high yesterday as Melbourne-based BHP Billiton Ltd., the world’s largest mining company, said steel production is slowing in China, Australia’s biggest trading partner. Australia’s dollar pared earlier gains that followed the publication of central bank minutes showing officials saw less downside risk to the economy at this month’s meeting. New Zealand’s currency slid as Asian stocks declined.
“There will be further risk that the Chinese economy will be slowing down” more than expected, said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “The Aussie is still a sell on rallies at the moment.”
Australia’s dollar lost 1.1 percent to $1.0490 at 11:23 a.m. in New York after earlier climbing as much as 0.2 percent. The Aussie slid 0.9 percent to 87.57 yen. Yesterday it rose as high as 88.64, the highest since May 2011. New Zealand’s currency fell 1.2 percent to 81.54 U.S. cents and slid 1 percent to 68.16 yen.
The Standard & Poor’s 500 Index fell 0.5 percent after earlier declining as much as 0.9 percent.
“The big infrastructure build clearly will come to some end,” BHP’s Ian Ashby, president of iron ore, told reporters today in Perth. “Steel growth rates will flatten, and they have flattened, and we still see positive growth out to the middle of the next decade.”
Chinese Premier Wen Jiabao this month announced an economic growth target of 7.5 percent for this year, down from an annual 8 percent during the past seven years.