The Australian dollar broke through the US77c mark today before pulling back, marking its highest level in 4 year and rising over 12 percent from in recent low of US68.28c.
The Aussie’s stellar performance is starting to cause speculation that RBA governor Glenn Stevens may try to talk the currency down next week when the Reserve Bank of Australia releases their latest interest rate decision.
It is widely known the RBA is concerned about the current level of the local currency with exports starting to take a hit and any further rises only promising to inflict more pain.
Although unthinkable just a week ago some analysts are predicting that the RBA may even cut the cash rate by 25 basis points next week in order to bring the Australian dollar back into their comfort zone.
Westpac’s chief economist, Bill Evans is taking things from another angle and believes the RBA will sit tight this time and take a neutral approach in the their monetary speech,
“Such a change in strategy around the AUD commentary would be very significant,” Mr Evans noted.
“But we also need to remember that central banks are inherently conservative institutions. We expect that, like ourselves, the RBA will be skeptical about the recent recovery in commodity prices and, more importantly, like ourselves, still expects the Federal Reserve to raise rates in June.” He added