| Bloomberg | - |
Australia's
dollar fell for a fourth day, touching the lowest in two weeks, as a
selloff in emerging-market assets spurred concern a slowdown in
developing economies will weigh on growth in the South Pacific nation.
Aussie Dollar Drops to 2-Week Low Amid Emerging-Market Concern
By Masaki Kondo & Mariko Ishikawa -
Aug 21, 2013 6:17 PM PT
Ten-year bond yields climbed to the highest in more than a year after U.S. Treasury yields rose on minutes of the Federal Reserve’s July meeting. U.S. policy makers were “broadly comfortable” with a plan to curtail bond purchases, the record said. The Aussie was 0.9 percent from a three-year low after India’s rupee tumbled to a record and Indonesia’s rupiah slid to the least in four years on speculation a paring of Fed stimulus will cause funds to flow out of higher-yielding assets.
“Historically, there has been a high correlation between emerging-market currencies and the Aussie dollar,” said Ray Attrill, the global co-head of currency strategy at National Australia Bank Ltd. in Sydney. Australia “digs up stuff and sells it to emerging markets -- that’s what Australia does best, so it makes sense that the fortunes of the currency should reside with the prospects for emerging-market growth.”
Australia’s currency declined 0.3 percent to 89.47 U.S. cents at 11:05 a.m. in Sydney after earlier dropping to 89.32, a level unseen since Aug. 7. It has fallen 2.4 percent in the previous three sessions. The Aussie touched 88.48 on Aug. 5, the weakest since August 2010.
New Zealand’s dollar lost 0.2 percent to 78.27 U.S. cents following a three-day, 3.2 percent slide. It earlier reached 78.11, the lowest since Aug. 5.
Yields Climb
The yield on Australia’s benchmark 10-year bond jumped 10 basis points to 4.08 percent, after reaching 4.11, the highest since April 2012. A basis point is 0.01 percentage point.In China, a preliminary reading on the Purchasing Managers’ Index (EC11FLAS) of manufacturing was at 48.2 in August, according to the median estimate of economists surveyed by Bloomberg News before HSBC Holdings Plc and Markit Economics release the data today. It was 47.4 in July. China is Australia’s biggest trading partner.
“We have still a reasonably high degree of confidence that Chinese growth has stabilized at or above 7 percent and that policy makers will do what’s necessary to ensure that growth holds,” said NAB’s Attrill. “That has meant we have seen key commodity prices are well back from the lows that we saw in July, so I think that means it’s slightly more nuanced story for Australia and the Aussie dollar.”
To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Mariko Ishikawa in Tokyo at mishikawa9@bloomberg.net;
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