The Reserve Bank of Australia decided to hold its interest rate at its lowest standing since 1960 at 3.00 percent today. Today’s rate decision was widely expected and follows a reduction of 25 basis points in April. The RBA has slashed the interest rate by a total of 425 
basis points since September 2008 in response to the global economic downturn.
Glenn Stevens, RBA Governor of Monetary Policy, commented on the Australian economy in the bank statement saying, “The Australian economy contracted in the latter part of 2008, and this has continued in 2009 to date, with both domestic and international demand weaker. Capacity utilisation has fallen back to about average levels, and will decline further over the rest of the year. With demand for labour weakening, growth in labour costs will probably also fall. These conditions are likely to see inflation continue to abate, though this is occurring only gradually so far, as the effects of the decline in the exchange rate are pushing up some prices.”
Stevens said that the global economy has continued to contract in 2009 but that there “are further signs of stabilisation in several countries.”
“The Chinese economy in particular has picked up speed in recent months and many commodity prices have firmed a little. The considerable economic policy stimulus in train in most countries should help contain the downturn and support an eventual recovery.”
The Australian dollar has traded higher in currency trading against most of the major currencies today after the rate announcement. The Australian dollar has advanced versus the U.S. dollar to trading at 0.7424 AUD per USD at 11:09am EST after opening at the exchange rate this morning of 0.7382(00:00 GMT).
The Aussie dollar has increased versus the Japanese yen with the AUD/JPY trading at 73.31 from today’s opening exchange rate of approximately 72.82. The euro has fallen versus the aussie today as the EUR/AUD trades at 1.7993 aussie per euro after opening the day at approximately 1.8111.
The aussie dollar has advanced against the Canadian dollar as the AUD/CAD trades at 0.8734 after opening the day at at 0.8570. Meanwhile, against the New Zealand dollar, the aussie has fallen as the AUD/NZD has gone from the 1.2825 opening rate to trading at 1.2777 later in the American trading session.
AUD/USD Chart – The Australian Dollar advancing versus the US Dollar in Forex Trading today and reaching its highest exchange rate since October 2008.
