Australian dollar hits low as RBA faces tough interest rate decisions amid inflation concerns and global economic pressures.
The Australian dollar has fallen to its lowest level since the COVID-19 pandemic, complicating the Reserve Bank of Australia’s (RBA) interest rate decisions ahead of its upcoming meeting.
The local dollar reached US61.38¢, raising concerns about increased price pressures, which may influence the RBA to maintain interest rates.
More critically, the Australian dollar’s trade-weighted index (TWI), which measures its value against a basket of currencies, fell below 60. This decline has economists worried, as the TWI is considered a more significant indicator for the economy compared to the US dollar.
The TWI’s value directly affects domestic inflation through import and export price changes. Meanwhile, investor expectations for a potential rate cut have grown following new core inflation data indicating a slowdown. Traders see a 72 per cent likelihood of a rate cut next month.
Concerns about China’s response to US trade tariffs further cloud the economic outlook. The Australian currency’s decline could have inflationary effects, possibly complicating the RBA’s monetary policy decisions.
As a result, the Australian sharemarket is anticipated to open lower, influenced by Wall Street’s decline following strong US jobs data.
