Architects of the float of Australia’s dollar, trading at a similar level to when exchange controls were lifted 30 years ago, say the currency must devalue and economic reform be renewed to avert a recession.
Currency traders are starting to price in a greater chance of the Australian dollar plunging to parity against its New Zealand counterpart for the first time as interest rates diverge in the two nations.
Australia’s economy expanded slower than economists forecast last quarter after households boosted savings, suggesting the central bank may need to do more to spur spending as a mining investment boom wanes. The Aussie fell.
Australia’s dollar was 0.2 percent from a five-year low versus New Zealand’s currency before the larger nation’s Reserve Bank meets amid repeated calls from its policy makers for a lower exchange rate.
Australia’s dollar fell to a 2 1/2- month low, heading for its sixth weekly drop, after the government’s rejection of a planned foreign takeover raised concern investment flows into the country may weaken.