Australian dollar higher despite RBA comments
The Australian dollar was higher in late trade on Tuesday, helped by some emerging weakness in the greenback.
Comments by the Reserve Bank of Australia that the currency remains overvalued when measured against recent falls in key commodity prices like iron ore were largely ignored by traders.
The Australian dollar changed hands at $US0.8766, compared with $US0.8697 late Monday. The US dollar crumpled against its rivals on Monday after investors booked profits on the huge gains the greenback posted Friday from a robust US jobs report.
The RBA left its benchmark interest rate unchanged for a 14th-straight month Tuesday, saying that while a recent sharp fall in the Australian dollar would help the economy, the currency still remained overvalued.
“The most prudent course is likely to be a period of stability in interest rates,” the Reserve Bank of Australia said.
The policy rate was held at a record-low 2.5 per cent to cushion the economy against the end of a mining investment boom, a sharp downturn in commodity prices, and growing signs of a slowdown in China.
In acknowledging the recent fall, the RBA has removed a prior reference to the Australian dollar being above estimates of its fundamental value, Mr Callow said.
“This suggests the currency is closer to, but arguably not yet at, its fundamental value,” he added.
Source: theaustralian- Aust dollar higher despite RBA comments
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