The Australian dollar has rallied today brushing off fears of a downgrade by the ratings agency S&P over potential budget problems in the nearest future.
At 3.50pm (GMT) the Aussie dollar was trading at US78.20c up from US77.89c in yesterday’s trade.
Ratings agency Standard and Poor released a statement yesterday that although Australia is in no immediate danger of losing its AAA credit rating, it needs to pullback on spending.
“The market brushed off the announcement pretty quickly,” noted analysts from Fibogroup forex brokers
“Many Countries and economies like the Eurozone are printing money to stimulate their economy whereas in Australia this option is not even on the cards so we think the budget is not in bad shape”
The reserve bank of Australia along with many analysts are claiming the Australian dollar is still overvalued but that’s not the case according to Ray Attrill, the NAB’s co-head of Currency Strategy,
“The RBA may be right to suggest that a lower AUD would promote more balanced growth, but its claim that the AUD remains overvalued rings hollow.”
Further weakness “is justified only if key fundamental drivers move further against the AUD”.
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