Australian Dollar Rallies As Steps Back From Jawboning

 
   


By James Glynn 
 

        SYDNEY--The Australian dollar rallied sharply Tuesday after the country's central bank left interest rates unchanged after a policy meeting and stepped back from further jawboning to push the currency lower.
        The Australian dollar was trading at US$0.7375 at 0615 GMT, up from US$0.7297 late Monday.
        The Reserve Bank of Australia has warned repeatedly in recent month that further falls by the Australian dollar were both "likely and necessary."
        But that message changed Tuesday to a more benign comment around the adjustment of the Australian dollar to falling commodity prices.
        "The Australian dollar is adjusting to the significant declines in key commodity prices," RBA Governor Glenn Stevens said in a statement.
        The comment immediately sparked a rally in the currency.
        Sean Callow, a currency strategist at Westpac, said the RBA had toned down its concern over a high Australian dollar, which has lately been weaker, recently hitting six-year lows against the U.S. currency.
        Still, some RBA watchers said the currency reaction was overdone.
        "It is highly unlikely that the board of Australia's central bank now suddenly feels that the Australian dollar is right where it should be or that it is at some fair value, says ANZ in a research note.
        It is more likely is that the RBA believes that it is going to fall from here without their encouragement, ANZ added.
        "This suggests that they are reasonably confident that the Fed will raise rates in the next few months," ANZ said.
        -Write to James Glynn at james.glynn@wsj.com
        (END) Dow Jones Newswires

        August 04, 2015 02:32 ET (06:32 GMT)

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