Aussie dollar gains, US dollar weaker

Aussie dollar gains, US dollar weaker

Story link: Aussie dollar gains, US dollar weaker

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An unexpected hike in interest rates by the Reserve Bank of Australia sent the Australian dollar in relation to the US dollar on Wednesday. The Bank raised the rate to 5.75 percent, a gain of 25 basis points and its highest level in six years, citing inflationary pressures, especially due to rising prices for commodities, as the reason for its action. Inflation in Australia is currently at 3 percent, the top of the acceptable range for the Bank.

The rate hike sent the Aussie up 1.4 percent to $0.7715 versus the US dollar, also up 1.4 percent against the Japanese yen to ¥87.42, and 1 percent higher in relation to sterling, to A$2.3929.

Meanwhile, in the US, even though the Institute for Supply Management’s non-manufacturing index was up in April and data showed that factory orders were up in March, the greenback was weaker at mid-session in New York. The dollar dropped 0.2 percent to $1.2637 versus the euro and was down 0.3 percent to $1.8443 in relation to sterling. The US currency remained flat versus the yen at ¥113.41.

In Asia, the South Korean won, the Singapore dollar, and the Malaysian ringgit were all up to their highest levels versus the US dollar since the 1997-1998 Asian crisis. The won rose 0.6 percent to Won934 to the US dollar, the Singapore dollar added 0.3 percent to S$1.5720, and the ringgit sat at M$2.6080. The Taiwan dollar was also up in relation to the greenback, to T$31.574.