Trade Resources Economy Australia's Tumbling Currency Would Push up Inflation Over Time Fuelled a Sharp Rise

Australia's Tumbling Currency Would Push up Inflation Over Time Fuelled a Sharp Rise

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A COMMENT by the Reserve Bank of Australia that Australia's tumbling currency would push up inflation over time fuelled a sharp rise by the Aussie in Asia today.

In minutes of its July 2 policy meeting, the Reserve Bank of Australia said the 15 per cent drop in the Australian dollar against the US dollar since the start of May would nudge inflation upward "a little" as import prices rise.

It was the first time the central bank had acknowledged the currency's slide would add to inflation risks. The bank also said the currency's decline was the most significant policy development of recent months.

Late today the Australian dollar was trading at $US0.9156, up from $US0.9087 ahead of the minutes. The unit traded as high as $US0.9173 after the Reserve Bank report.

The Aussie fell to $US0.9000 last week to its lowest levels in nearly four years, extending a slide that began in May when it was above parity as traders began to react to falling commodity prices, signs of a slowdown in China and talk of an imminent scaling back of economic stimulus in the US.

Source: http://www.theaustralian.com.au/business/markets/rba-comments-on-inflation-give-australian-dollar-a-boost/story-e6frg94o-1226680256689
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RBA Comments on Inflation Give Australian Dollar a Boost
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