Aussie dollar slides on RBA rate cut

Currencies Direct May 8th 2013 - < 1 minute read

The Australian dollar slid against its US counterpart on Tuesday (7 May 2013) after the Reserve Bank of Australia (RBA) cut interest rates to a record low.

AUD/USD fell three-quarters of one per cent to 1.0178 following the 25-basis-point cut to 2.75%%.

The Aussie also lost ground on the pound, with GBP/AUD shooting up to 1.5287 before retracing most of those gains to trade around 1.5186.

Meanwhile the Aussie fell 0.8% against the euro and one per cent against the yen following the announcement.

In a statement accompanying the rate cut, RBA governor Glenn Stevens suggested the move was designed to weaken the Aussie.

He said: "The exchange rate … has been little changed at a historically high level over the past 18 months, which is unusual given the decline in export prices and interest rates during that time."

Mr Stevens added that the RBA "judged that a further decline in the cash rate was appropriate to encourage sustainable growth in the economy, consistent with achieving the inflation target".

Meanwhile the euro rose against the greenback after stronger-than-forecast German factory data, with EUR/USD up 0.3% to 1.3115.

Sterling slid against the dollar as GBP/USD fell by around 0.3% to 1.5490, off the recent two-month high of 1.5606 hit on 1 May.

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