Australia’s dollar strengthened, extending its first five-day gain in three weeks, as a bigger-than-expected increase in Chinese imports offset the impact of a Reserve Bank downgrade to its growth forecasts.
The Australian currency was poised to rise versus most of its 16 major peers this week. It earlier weakened after the RBA retained its scope to lower interest rates in its quarterly monetary policy statement today. The Aussie, the most overvalued after the New Zealand dollar among major currencies, hasn’t tracked fundamentals, central bank Assistant Governor Guy Debelle said yesterday.
“The RBA’s doing their absolute best to talk the currency down and, given the fragile economic outlook, that may help them to some degree,” said Callum Henderson, the global head of currency research at Standard Chartered Plc in Singapore. “But positive news in terms of Chinese imports, particularly commodity imports, should be beneficial” for the Aussie, Henderson said.