Australian dollar down as inerest rates expected to stay

Story link: Australian dollar down as inerest rates expected to stay

The Australian dollar fell 0.6c to $0.7742 in relation to the U.S. dollar on Tuesday. It also fell in relation to sterling, to A$2.4421, and was down ¥0.5 to ¥81.35 in relation to the yen.

This was mostly due to expectations that the Australian Reserve Bank will not raise interest rates Wednesday.

Most analysts believe there is no need to raise the rates higher than the 5.5 percent they are presently, especially after the news that approval for home construction fell 6.8 percent in March.

The Australian dollar has been kept strong by high bond yields and good performance in equity markets, but analysts say that these conditions will not continue unless productivity grows.

In other currencies, sterling was down slightly, to £0.6799 against the euro. The U.S. dollar was down slightly as well in anticipation of the expectation that the Federal Reserve will raise interest rates 25 basis points, to 3 percent at its Tuesday meeting. The U.S. dollar was down to $1.2865 in relation to the euro and down ¥105.10 against the yen.