The Australian dollar reached a nine-month low against the United States dollar on Monday 14th August 2023 to
exchange at US 64.85 Cents after losing 0.6%. The Australian dollar initially dropped to 64.59 US cents before recovering slightly to 64.85 US cents later in the day. with this development causing global investors to become uneasy.
This decline has extended over four consecutive weeks, attributed to the Reserve Bank of Australia’s cautious stance, apprehension about China’s situation, and a robust US dollar, according to Sean Callow, senior currency strategist at Westpac.
Callow suggested that the Australian dollar may fall below 64 cents if investor apprehensions intensify about China’s property market or if the upcoming July economic activity data disappoints.
Australian dollar falls below US 65 Cents to exchange to close at 64.85 US cents
The Australian dollar hit a nine-month low, falling below US 65cents to exchnage at US 64.85 cents amid growing concern about the strength of the Chinese economy and the country’s debt-laden real estate sector.
Concerns about China’s economy and its demand for commodities had sent the Australian dollar to its lowest level against its US counterpart in nine months as the Australians traded the United States dollar to 64.85 US cents, from 65.25 US cents at Friday’s ASX . This is the first time it is trading below US 65 cents since mid-November it was below 65 US cents.
The Aussie had also fallen to a three-year low against the euro and the British pound, in advance of Tuesday’s release of Reserve Board minutes that could shed light on the board’s thinking as Michele Bullock prepares to take the reins on Friday.
Eight of the ASX’s 11 sectors finished lower with materials the biggest loser, falling 1.7 per cent amid the concerns about Chinese demand for commodities. BHP dropped 2.1 per cent to $44.75, Fortescue retreated 1.8 per cent to $20.62 and Rio Tinto declined 2.3 per cent to $106.52. A number of companies were reporting financial results at the start of one of the busiest weeks of earnings season.
The Australian dollar also faces pressure from declining commodity prices, particularly iron ore.
As global financial market experience a “risk-off” atmosphere due to investor anxieties, the Australian dollar’s performance serves as an international investment risk indicator.
Looking ahead, experts predict a potential upward trend for the Australian dollar over the next year, driven by a weakening US dollar and potential rate cuts by the US Federal Reserve.
