Australia’s dollar was poised to match its worst weekly run of losses since before it was floated three decades ago after Reserve Bank Governor Glenn Stevens reiterated the currency is too high and the Federal Reserve pared stimulus that has depressed the greenback.
The Aussie has dropped 1.2 percent this week against its U.S. peer in a ninth straight decline, the longest run since a 14-week slump to August 1982. The currency was freely floated in December 1983. Stevens said on Dec. 18 that an exchange rate above 90 U.S. cents is probably not “sustainable.” The Aussie fell to 88.21 U.S. cents later that day, the lowest since August 2010, after the Fed decided to trim the pace of its monthly bond purchases by $10 billion to $75 billion.
“We’ve been hearing the central bank here talk down the Aussie for a while,” said Stan Shamu, a Melbourne-based market strategist at IG Ltd. “A lot of people thought they’d wait and see what happened with the U.S. and tapering before taking action, and now it’s really looking like the Aussie is in for a period of further weakness.”
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