Aussie Holds Gain After RBA Refrains From Cutting Interest Rates

Australia’s dollar held gains after central bank Governor Glenn Stevens refrained from cutting interest rates, keeping them at a record low for a sixth month.

The currency has weakened 12 percent against the greenback this year, the worst performer after New Zealand’s dollar among Group-of-10 peers. The Reserve Bank of Australia left its benchmark at 2 percent Tuesday, as forecast by 17 of 29 economists. Stevens is also relying on the currency to act as a shock absorber for the drop in prices for Australia’s coal and iron ore exports.

“Strength in the Australian dollar on a no-cut announcement may be fleeting and it is likely to fall if the RBA inserts even a modest easing bias into the statement,” Greg Gibbs, director of Amplifying Global FX Capital in Singapore, wrote in a note before the policy decision.

Australia’s currency was up 0.3 percent to 71.68 U.S. cents as of 2.36 p.m. in Sydney. It reached a six-year low of 68.96 cents in September.

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