Rate rise to 3.25% in Australia boosts demand for the aussie

The Australian dollar continued to push record highs yesterday, supported by the RBA’s decision to raise rates as the global financial crisis eases.

  • The aussie continued to rally strongly, gaining nearly three cents, a 1.4% movement, as investors sought to take advantage of the higher-yield now available on Australian assets.
  • The Reserve Bank of Australia became the first of the G20 nations to raise their base cash rate and helped to ease fears over the state of global economic recovery.
  • Analysts also noted that the widening yield advantage points to further aussie appreciation, particularly as the RBA, unlike other central banks, does not seem too concerned about their currency strength.
  • Additionally, the pound was further undermined yesterday as a negative manufacturing figure resurrected fears over Britain’s third quarter growth rate, pushing the price lower.
  • The aussie dollar continues to trade strongly in trading this morning, encouraged by rallying Asian equities, pushing the price down near 1.77.