Rba Steps In To Lift The Dollar
The Age
Friday November 3, 2000
The Reserve Bank yesterday drew a line in the sand to support the beleaguered Australian dollar, aggressively intervening to push it above 53 US cents.
Reported buying by the central bank at around 4.20pm yesterday kicked the sagging currency from 51.80 US cents to 53.40 US cents - its highest in three weeks.
The move caught dealers unaware in a reported thin market as they scrambled to catch up. Last night, the dollar had eased slightly to 52.86 US cents.
``Rumors are rife of the Reserve Bank intervention and their action was sighted through the currency brokers, so they wanted to be seen intervening," a dealer said.
``At that point everyone just got out of their way and watched the dollar climb."
ANZ currency strategist Karen Pringle said there was no other factor behind the dollar's sharp climb, with the euro little traded at the time.
``In the short term, the dollar will probably hold these higher levels," she said.
``But we've seen bounces before, and then the Australian dollar can get taken down again by weakness in the euro.
``It all comes down to the performance of the US dollar and US markets in the next few days."
HSBC market economist Grant Fitzner said the Reserve Bank's actions might be a prelude to further intervention by the Group of Seven in support of the euro.
The Australian dollar reached another record low on Tuesday, when it fell to 51.10 US cents.
Earlier yesterday, the dollar took the September retail sales data in its stride. The data showed the Olympic Games had delivered a solid boost to turnover in the month.
The Bureau of Statistics said retail sales had risen by a stronger-than-expected 0.8 per cent to a seasonally adjusted $12.8billion - 4.7 per cent higher than a year ago.
But the spoils went mainly to the Olympic state. Victoria's retail sector suffered a 1.4per cent dip in September, the largest fall in the country.
© 2000 The Age