Aussie dollar hit hard by rate cut rumours

Published: 30 Jan at 5 AM Tags: Euro, Dollar,

The Australian dollar has slumped to its lowest level in more than five years. This is because investors are betting the Reserve Bank of Australia will introduce a cut in interest rates. The Aussie shed 2 per cent on Thursday to fall to $0.7757.

Earlier the currency fell as low as $0.7720, a low not witnessed since the middle of 2009.

A policy meeting at the RBA next Tuesday is likely to result in a decision to cut the 2.5 per cent cash rate. The move will follow a decision by the Reserve Bank of New Zealand to introduce the possibility of a rate cut and the Bank of Canada’s decision to introduce easing measures last week.

The New Zealand and Canadian currencies have been hit hard and the US dollar is currently riding at a four-year high against the New Zealand Dollar, worth $0.7235. The greenback is at a six-year peak against its Canadian rival at C$1.2678.

The euro has edged up slightly to $1.1318 after dropping to a low of $1.1098 at the start of the week. The common currency has also firmed a tad against the yen at 133.95 after dropping as low as 130.16 on Monday.