News

Dollar falls after Kevin Rudd's resignation

Thu February 23, 2012 11:09am

THE Australian dollar has fallen to its lowest level in a month, as the US dollar strengthens and leadership tensions re-ignite in Australia.

At 7am AEDT today, the Australian dollar was trading at 106.43 US cents, down from 106.71 cents yesterday.

Since 5pm AEDT yesterday, the local unit has traded between 106.06 US cents and 106.82 cents.

GFT Forex director of currency research Kathy Lien said the US is trading higher against most of the major currencies.

"So, that's contributing a bit to the pressure on the Australian dollar," Ms Lien said from New York.

"The real reason why the Aussie dollar is performing so poorly is because of the political uncertainty related to (Foreign Minister Kevin) Rudd's sudden resignation and his threat to challenge (Prime Minister) Julia Gillard.

"I think markets are worried about a potential leadership change, what it means for any policy measures they have for Australia and the uncertainty it provides."

Tomorrow, Reserve Bank of Australia (RBA) governor Glenn Stevens will appear before the House of Representatives Standing Committee on Economics, which Ms Lien said would be of interest for markets.

The appearance comes after the RBA's surprise decision not to cut the cash rate at its February 7 board meeting.

"I think that the market is still trying to figure out whether the Reserve Bank is trying to cut interest rates or not," Ms Lien said.

She said she expected the Australian dollar to trade in a range between 105.85 US cents and 106.50 cents today.