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Australian Dollar Drops to Lowest This Month on Mining Concern

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Aug. 24 (Bloomberg) -- Australia’s dollar declined, touching the lowest level this month, after Reserve Bank of Australia Governor Glenn Stevens said the currency would probably fall if the nation’s mining boom were to collapse.

The so-called Aussie slid to a six-week low against its New Zealand counterpart as Asian stocks declined, sapping demand for higher-yielding assets. The New Zealand dollar erased an earlier gain versus its U.S. peer after Finance Minister Bill English said the currency is above the desirable level.

“Sentiment is still being influenced to some extent by all of these negative news reports regarding the resources sector,” said Ray Attrill, global co-head of foreign-exchange strategy at National Australia Bank Ltd. in Sydney. He is “moderately bearish” on the Australian and New Zealand currencies.

The Australian dollar slid 0.4 percent to $1.0403 as of 5 p.m. in New York, after earlier touching $1.0376, the lowest since July 12. The currency hit NZ$1.2818, the weakest since July 12, before trading down 0.2 percent at NZ$1.2826.

The New Zealand dollar, known as the kiwi, fell 0.2 percent to 81.12 U.S. cents after earlier climbing as high as 81.42.

Australia’s currency is “a bit on the high side,” the RBA’s Stevens said today in testimony to a parliamentary panel.

The governor also spoke about the nation’s resources bonanza, saying “if you really think the whole thing’s going to go away, imminently, the mining boom, this thing is going to completely crash, the relative price shift isn’t there, the whole thing’s not really going to persist, then the Aussie dollar in that scenario presumably would need to be much lower than it is.”

New Zealand’s English said the exchange rate for his nation’s currency “is higher than we want it to be.” The kiwi’s strength reflects weakness in the U.S. dollar after Federal Reserve policy makers reduced interest rates to near zero, he said in an interview today.

To contact the reporters on this story: Cordell Eddings in New York at ceddings@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

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