Fed: Flagging dollar hopes for rate cut

AAP General News (Australia)
04-04-2001
Fed: Flagging dollar hopes for rate cut

CANBERRA, April 4 AAP - The flagging Australian dollar may get badly needed support
this morning with the Reserve Bank set to announce an interest rate cut.

Analysts are tipping a cut of 0.5 per cent which would bring interest rates down to
five per cent.

Any move on rates would help an Australian dollar that on Monday slipped to another
low on international markets of 47.75 US cents.

Treasurer Peter Costello played up the benefits of the low dollar, and argued it was
mostly due to the surge in support for the US dollar.

"There are a lot of people in rural Australia getting benefits in relation to rural
commodity prices that they've never had before," he said.

But Labor's treasury spokesman Simon Crean said the Australian dollar was performing
poorly against most currencies.

"Why has our currency also fallen 14 per cent against the British pound, 13 per cent
against the Euro, 16 per cent against the Singapore dollar, 23 per cent against the Mexican
peso and 11 per cent against the Trade Weighted Index since July the first?" he asked
in parliament.

Commonwealth Securities chief economist Craig James said the Australian dollar was
in poor company in its falls against the US dollar.

"The Aussie dollar lags only the Turkish lira (-64 per cent) and the Rwanda franc (-19.3
per cent) in terms of the decline against the US dollar," Mr James said.

"At present there are no superheroes waiting on the sidelines to rescue the Aussie dollar."

AAP sw/ge/sb

KEYWORD: ECONOMY DAYLEAD

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