Business | Economy
Australian dollar likely to hit new lows
Investors should sell the Australian currency, taking advantage of its latest rise to two-month highs against the US dollar last week, as a sharp global slowdown could push it to new lows early next year, a fund manager said.
- Reuters
- Published: 23:51 December 21, 2008
Sydney: Investors should sell the Australian currency, taking advantage of its latest rise to two-month highs against the US dollar last week, as a sharp global slowdown could push it to new lows early next year, a fund manager said.
Once the darling of carry trade due to Australia's interest rates, which rose to as high as 7.25 per cent in March, the Aussie tumbled to a five-year low in late October as risk-wary investors fled carry trades on fears of a global recession.
Steep cuts in US interest rates last week lifted the Australian dollar to a two-month high above US$0.70 (Dh3.57) on Thursday but the rise is likely to be short-lived, said Russell Thompson, chief investment officer at London-based Cambridge Strategy hedge fund.
"My view is that the Aussie is a sell. These are good levels to be going short Aussie," he said on Friday, predicting that it may drop more than 10 cents to below US$0.60 before March as China's abrupt slowdown aggravates slackening global demand for commodities.
Lower commodity prices are bad for Australia as it is a major commodities exporter. The Reuters-Jefferies CRB index, a commodity index, has lost nearly 39 per cent this year.
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