RBA Stills Believe Currency is Too High

The Australian dollar weakened after the Reserve Bank said the exchange rate remains high following a policy decision to keep borrowing costs at a record low today.

The Aussie slid versus most of its 16 major counterparts after RBA Governor Glenn Stevens said in a policy statement the currency “remains high by historical standards.” The Aussie rose earlier after a report showed building approvals increased more than analysts forecast, while continuing tension over Ukraine kept demand for higher-yielding assets limited.

“It’s a small negative for the Aussie in that the RBA was willing to resume even the mildest jawboning,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney. “It’s just a very gentle reminder that longer term, they do expect the Aussie will be lower.”

Bloomberg

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