Aussie Declines After Interest Rate Cut

The Australian dollar reversed its yesterday gains versus the U.S. dollar and the yen after the Reserve Bank of Australia announced its decision to reduce the target cash rate today.
The Australian currency was falling significantly against the greenback and the Japanese yen during the Asian trading session, immediately after the country’s central bank cut the interest rate by 75 basis points to 5.25 percent.
Although the rate cut produces a negative effect on the Aussie in the daily trading, the long-term influence of the lower interest rates may turn out to be positive, removing the Aussie from the carry trade system. Considering the current situation with the global finance and the China’s slowdown, Reserve Bank of Australia may continue cutting the rate further.
Since the major troubles with the global financial system started three months ago, the Australian dollar lost 29 percent against the U.S. dollar and 35 percent against the Japanese yen.
AUD/USD fell from 0.6749 to 0.6741 as of 9:16 GMT today after reaching as low as 0.6602. AUD/JPY went down from 66.96 to 66.67 with a daily low at 65.03. AUD/NZD declined from 1.1428 to 1.1375 with a daily minimum rate at 1.1267.

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