Australian Dollar Free-Fall due to Deficit
The deficit is ``a perennial issue that can't be solved overnight,'' said Brendan Flynn, associate director of sovereign and public finance ratings at Standard & Poor's Corp. ``If investor sentiment turns against Australia, it will make it hard for companies to find funds. It would also lead to currency weakness", he said.
Flynn said the level of Australia's net foreign debt is ``a risk'' to the country's top AAA credit rating.
The Reserve Bank, which meets today, will probably raise its overnight cash rate target for the first time since December 2003, by a quarter-point to 5.5 percent. The bank announces its decision today at 9:30am Sydney time.
With Australian interest rates very high and set to increase further after today's meeting of the RBA, the Australian dollar could inflate a little more before the inevitable free-fall toward 70 cents.
Source: Bloomberg.com
Flynn said the level of Australia's net foreign debt is ``a risk'' to the country's top AAA credit rating.
The Reserve Bank, which meets today, will probably raise its overnight cash rate target for the first time since December 2003, by a quarter-point to 5.5 percent. The bank announces its decision today at 9:30am Sydney time.
With Australian interest rates very high and set to increase further after today's meeting of the RBA, the Australian dollar could inflate a little more before the inevitable free-fall toward 70 cents.
Source: Bloomberg.com
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