Australian dollar unexpectedly falls to four-year low; local market posts first modest gain in over a week
The Australian dollar fell suddenly and inexplicably this afternoon, taking the currency below 82 US cents for the first time in more than four years.
The dollar fell more than 0.5 cents against the greenback after lunch, with analysts unable to pinpoint a clear reason for the sudden drop.
It remained relatively stable since the fall at around 81.5 US cents.
Analysts said the fall had been coming given the continued weakening of key commodity prices.
Westpac senior currency strategist Sean Callow said the dollar’s dip on Wednesday was curious but not unreasonable.
“The Aussie had been on borrowed time above 82,” Mr Callow said.
“We’d been wondering when it would break, given that there is ongoing expectation, chatter about the Reserve Bank cutting rates next year, that commodity prices have not found a base. We had another fall in iron ore prices overnight.”
It was a different story for the local share market which managed to post a modest gain – its first since Monday last week.
The All Ordinaries index closed up 10 points or 0.2 per cent at 5,141 and the ASX 200 also added 10 points to 5,162.
Energy stocks led the market’s rise; Santos added 4.3 per cent, while Woodside rose 3 per cent.
The miners also gained ground, with Rio Tinto up 1.4 per cent and BHP Billiton closing 0.3 per cent higher.
That was offset somewhat by falls of 1.7 per cent for Fortescue Metals Group and 1 per cent for gold miner Newcrest.
The finance sector also weighed on trade despite a 0.1 per cent rise for the Commonwealth Bank.
ANZ fell 0.9 per cent, Westpac lost 0.8 per cent and NAB closed 0.5 per cent lower.
Telstra added 0.7 per cent and the airlines were mixed, with Qantas down 1.7 per cent but Virgin Australia up 1.2 two per cent.
The Ten Network closed down 4.6 per cent, with the firm advising investors at its annual general meeting that it was still considering potential takeover bids.
The Australian dollar was buying around 65.3 euro cents, 51.8 British pence, 95.4 Japanese yen and 105.3 New Zealand cents.
West Texas intermediate crude oil rose to $US55.92 a barrel, Tapis crude in Singapore was weaker at $US61.49 a barrel, and spot gold was trading around $US1,197 an ounce.
