Aussie Currency Hits Five-Week High reports ConverToCurrency.com

Government asks central bank to loosen slack to funds

San Francisco, CA (prHWY.com) November 15, 2012 - San Francisco, CA- The Australian local currency hit a five-week high after the central bank was able to keep its interest rate steady and its domestic inflation picked up.

Governor Glenn Stevens' board left the overnight cash-rate target at 3.25%, said the Reserve Bank of Australia. The move was a surprise to economists, as 20 of 27 surveyed predicted a cut to 3%. Traders had been split down the middle in regards to whether or not Stevens would stand pat or cut.

"With prices data slightly higher than expected and recent information on the world economy slightly more positive, the board judged that the stance of monetary policy was appropriate for the time being," Stevens said in the statement.

Australia is currently one of the only industrial states that must remain vigilant of the effects of economic inflation risks. The country is still heavily reliant on Chinese demand in order to bolster its growth. Australia's currency is above parity with the U.S. dollar, even while America's expansion accelerates.

"Unless global conditions take a sharp turn for the worse, the RBA is unlikely to act," said Daniel Martin, an economist at Capital Economics Ltd. in Singapore. "We think the RBA will now keep its cash rate on hold until late-2013 to help counteract lackluster global demand and boost non-mining sectors ahead of a peak in mining investment."

After the decision, Australia's currency jumped to $1.0438, which marks the highest point since the end of September.

Nearly 5% of Australia's GDP is tied to the 25% of exports that are sent to China. Sixty percent of that is in iron ore. The data from October showed non-manfacturing work has rebounded from terribly slow expansion over the last 19 months. Experts are concerned that the numbers indicate a seven-quarter slowdown.

The government in Australia has made a point to press the central bank to ease the slack on monetary policy to help swing the budget back into the black. The move is seen as a bid to put a prettier face on the government before the elections next year.

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