Australian Dollar Weathers Global Economic Crisis

The Reserve Bank of Australia (RBA) lowered the interest rate on June 5, 2012. Since then, the Australian dollar has risen 7.2 percent.  With this, the RBA has decided to keep the interest rate at a status quo for the second month.

This was decided upon in their policy meeting last August 7.

Since the reduction of 1.25 points, the economy saw more household spending, higher home prices and, ad a lot more capital spending.  Despite the volatile global economic climate with the debt crisis in the eurozone, the Australian dollar is still going strong.

The minutes of the policy meeting of the RBA reported that the Swiss National Bank bought some 100 billion euros in May and June.  Some were converted to other currencies including the Australian dollar.  The purchase was done in order to stop the inflation.

RBA Governor Glenn Stevens’ move to keep the interest rate as is has resulted to a gain in employment and wages, as well as, home-loan approvals.  However, consumer confidence has gone down in the last five months.

With the slowdown in the requirement of China for resources from Australia, the economy has been affected.  China was growing rapidly from the second quarter last year until the Europe’s debt crisis happened.

The housing sector and mining sectors have improved a little. Iron ore and natural gas are resources much needed.  In China and India, there is a demand for electricity and steels benefitting mining companies, Rio Tinto and BHP Billiton.