Aussie Drops From 5-Month High After RBA Minutes; Bonds Fall

Australia’s dollar declined against all 16 major peers after minutes of the Reserve Bank’s meeting this month signaled a rise in the local currency was a drag on efforts to achieve balanced growth.

The Aussie fell from near the highest in five months versus the greenback after the central bank reiterated the most prudent course is likely to be a period of steady interest rates in minutes published today from its April 1 meeting, when policy makers left the benchmark lending rate at a record-low 2.5 percent. Demand for the Aussie and New Zealand’s kiwi were hampered ahead of a report tomorrow economists forecast will show the economy slowed in China, the South Pacific nations’ biggest trading partner.

“The RBA is showing a little bit more interest in the currency,” Greg Gibbs, head of Asia Pacific markets strategy at Royal Bank of Scotland Group Plc in Singapore, said of the minutes. “Perhaps they could have been construed as the RBA pushing the line on the currency.”

Australia’s dollar fell 0.5 percent to 93.82 U.S. cents as of 4:51 p.m. in Sydney from yesterday. It touched 94.61 on April 10, the highest since Nov. 8. The Aussie weakened 0.4 percent to 95.57 yen. The kiwi dropped 0.6 percent to 86.40 U.S. cents and declined 0.4 percent to 88 yen.

Australia’s government bonds declined, pushing the 10-year yield up 3 basis points, or 0.03 percentage point, to 3.99 percent. The three-year rate climbed two basis points to 2.95 percent.

“The exchange rate remained high by historical standards,” the RBA said in the minutes. “Despite commodity prices falling further over the past month, the exchange rate had appreciated a little further.”

Iron ore tumbled into a bear market in March, slumping 27 percent from a five-month high reached in August. Prices have since recovered 12 percent.

In China, gross domestic product probably increased 7.3 percent in the first quarter from a year ago, according to the median estimate of economists surveyed by Bloomberg News before the data tomorrow, down from 7.7 percent in the fourth quarter.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE