The Australian dollar jumped against its US peer and the Japanese yen today after the Reserve Bank of Australia decided to cut its main cash rate to boost economic growth.
The RBA slashed its key interest rate by 25 basis points to 3 percent today. The Governor Glenn Stevens commented about the decision in the statement:
This will help to foster sustainable growth in demand and inflation outcomes consistent with the target over time.
Stevens said that risks to the global economy “are still seen to be on the downside, largely as a result of the situation in Europe”, while the domestic growth “has been running close to trend over the past year”. As for the currency, the statement noted that “the exchange rate remains higher than might have been expected”.
AUD/USD climbed from 1.0419 to 1.0464 as of 9:30 GMT today, while AUD/JPY dived from 85.68 to 85.38 before trading at 85.85.
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