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Aussie Slides Versus Peers After RBA Says Currency Remains High

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March 4 (Bloomberg) -- The Australian dollar weakened against most of its 16 major peers after the Reserve Bank said the exchange rate remains high following a decision to keep borrowing costs at a record low today.

The Aussie traded 0.4 percent from the lowest in almost a month after RBA Governor Glenn Stevens said that while the currency’s decline to date has helped the economy, it “remains high by historical standards.” It rose earlier after a report showed Australian building approvals increased more than analysts forecast, while continuing tension over Ukraine kept demand for higher-yielding assets limited.

“It’s a small negative for the Aussie in that the RBA was willing to resume even the mildest jawboning,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney. “It’s just a very gentle reminder that longer term, they do expect the Aussie will be lower.”

The Australian dollar lost 0.1 percent to 89.31 U.S. cents at 4:59 p.m. in Sydney after climbing as much as 0.4 percent. It touched 88.91 cents yesterday, the weakest since Feb. 5. New Zealand’s currency was little changed at 83.73 U.S. cents.

Australia’s benchmark 10-year yield rose two basis points to 4.01 percent. The yield on debt due in three years, among the most sensitive to interest-rate expectations, climbed five basis points to 2.83 percent after dropping to as low as 2.76 percent yesterday, the least since Sept. 30.

RBA Decision

The RBA’s decision to keep the cash rate unchanged at 2.5 percent was predicted by all 32 economists surveyed by Bloomberg News. “The most prudent course is likely to be a period of stability in interest rates,” Stevens said today in a statement after the meeting, echoing remarks made following the bank’s February gathering.

Separate data today showed Australia’s current-account deficit narrowed in the fourth quarter, while building approvals rebounded in January by more than economists predicted.

Foreigners bought A$12.4 billion ($11.1 billion) of Australian government debt in the fourth quarter, the statistics bureau said on its website. Overseas holdings rose to A$217.38 billion, the most on record.

Russia justified its intervention in the Crimea as a legitimate response to a request from Ukraine’s ousted president, while western leaders sought to keep the standoff from spiraling into war. U.S. Secretary of State John Kerry is set to arrive in Ukraine’s capital today.

To contact the reporter on this story: Kristine Aquino in Singapore at

To contact the editor responsible for this story: Garfield Reynolds at

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