Aussie Dollar Declines on RBA Comments, Slowing Chinese Growth

The Australian dollar declined versus its U.S. peer after the central bank said the strength of the currency and slowing Chinese growth are risks to the economy, minutes from a Sept. 4 meeting showed.

The Aussie slid against the majority of its 16 most-traded counterparts as the Reserve Bank of Australia minutes spurred speculation the central bank may cut interest rates if necessary. The New Zealand dollar gained versus most of its peers after a Nikkei report speculated the Bank of Japan (8301) could take steps to weaken the yen as soon as tomorrow.

“Australia’s dollar is lower after the RBA minutes show the central bank’s proclivity for easing, which is nothing new, but it has served as a reminder and resulted in other risk currencies outperforming it, especially New Zealand’s dollar,” John Curran, a senior vice president at CanadianForex Ltd., an online foreign-exchange dealer, wrote to clients yesterday.

Australia’s dollar lost 0.2 percent to $1.0457 yesterday in New York after earlier falling 0.6 percent. The Aussie rose to $1.0625 on Sept. 14, the highest since March 20. It fell 0.1 percent to 82.42 yen after declining as much as 0.8 percent to 81.79.

The New Zealand dollar increased 0.1 percent to 82.72 U.S. cents. The so-called kiwi gained 0.3 percent to 65.20 yen after earlier falling as much as 0.5 percent.

The BOJ increased the size of a fund to buy assets such as government debt by 5 trillion yen ($60 billion) to 45 trillion yen in July, and has kept its target for overnight lending between zero and 0.1 percent since October 2010.

The kiwi has strengthened 3.9 percent this year, the biggest increase among the 10 developed-nation currencies on the Bloomberg Correlation-Weighted Indexes. The Aussie has fallen 0.5 percent and the greenback is down 3.1 percent.

To contact the reporter on this story: Joseph Ciolli in New York at jciolli@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net