Australian Deficit Widens, RBA Comments on Dollar Strength

Marcus Jacob
03 Dec, 2013
New York City

Australian current account deficit widened in the third-quarter to September and dollar dipped after the Reserve Bank of Australia left its key rate at record low 2.5%. October retail sales rose more than expected at 0.5% to $22.8 billion.

[R]4:30 PM Sydney – Australian current account deficit widened in the third-quarter to September and dollar dipped after the Reserve Bank of Australia left its key rate at record low 2.5%. October retail sales rose more than expected at 0.5% to $22.8 billion.[/R]

Australian stocks closed down for the second day in a row and central bank left its reference rate unchanged as expected but commented on the high dollar.

The Australian Bureau of Statistics reported retail sales in October rose 0.5% to $22.28 billion.

In a separate report the statistics agency said current account deficit in the third-quarter to September widened and seasonally adjusted trade deficit for the quarter increased 5% to $12.71 billion.

The Reserve Bank of Australia kept the official cash rate on hold at record low of 2.5% and Governor Glenn Stevens said global financial conditions are favorable and there is an ample supply of liquidity to credit worthy borrowers.

However, he reiterated that despite the recent weakness in the Australian dollar, the currency is “uncomfortably high.”

Australian dollar fell to 90.67 U.S. cents. In stock trading, turnover climbed to 857 million shares worth $4.4 billion.

The ASX 200 index slipped 23.40 or 0.4% to close at 5,256.10 and the broader All Ordinaries fell 23.90 to 5,249.60.

Stocks in Review

Rio Tinto dropped 36 cents to $65.49 and the resource company plans to halve its capital spending to $8 billion from last year''s level.

The mining group said it will reduce the capital spending to $11 billion in 2014 from below $14 billion this year and cut debt from $22 billion to “mid-teens.”

BHP slumped 45 cents to $36.45. Woodside Petroleum Limited rose 2 cents to $37.02.

Westpac decreased 30 cents to $32.30.

Aurizon Holdings Ltd gained 1.7% to $4.75 after Queensland’s Liberal National Party sold 74.3 million shares valued $350 million in the formerly state owned company to reduce state debt.

Mortgage Choice Limited fell 0.7% to $2.94 after the mortgage broker was fined for $30,600 for three infringement notices issued by ASIC for false advertising claim that mortgage refinancing saved customers ''$10,000 over 5 years.''

Stockland Corporation Ltd closed unchanged at $3.80 after the property developer reaffirmed earnings per share growth in fiscal 2014 guidance between 4% and 6%.

The company added it has signed unconditional contracts with Goodman Australia Industrial Fund to acquire the Forrester Distribution Centre in Western Sydney for about $72.85 million.

Virgin Australia Holdings Ltd jumped 2.6% to 39.5 cents after the company welcomes a decision by the Takeovers Panel ruled that the current capital raising does not violate the change in control requirement for Virgin Australia.

Stephen Mayne, the activist shareholder and founder of Crikey filed a complaint to amend the terms of $350 million capital raising by Virgin.