Aussie Dollar Drops to New 5-Year Low After Rate Cut to 2.25%

Marcus Jacob
03 Feb, 2015
New York City

Reserve Bank of Australia lowered its reference rate for the first time since August 2013 by 25 basis points to 2.25%. Aussie dollar fell 1.5 cents to 76.60 U.S. cents to a new five-year low. Australian trade deficit narrowed in December and fell 3.9% in 2014.

[R]5:30 PM Sydney – Reserve Bank of Australia lowered its reference rate for the first time since August 2013 by 25 basis points to 2.25%. Aussie dollar fell 1.5 cents to 76.60 U.S. cents to a new five-year low. Australian trade deficit narrowed in December and fell 3.9% in 2014.[/R]

Australian central bank lowered reference rate following weeks of speculation and hinted a gradual reduction in the coming months as commodities prices fall and global economic growth is expected to slow in the first half.

The Reserve Bank of Australia lowered its policy interest rate to a record low to 2.25% from 2.50%.

The Australia Bureau of Statistics said seasonally adjusted trade deficit in December narrowed to $436 million followed by downwardly revised $1.016 billion deficit in November.

Exports in the month rose 1% to $27.24 billion while imports fell 1% to $27.68 billion.

For the year, trade deficit dropped 3.9% to $9.9 billion compared to $10.3 billion in 2013 as exports jumped 2% to $7.8 billion and imports climbed 2% to $7.3 billion.

In a separate report, the statistics bureau said seasonally adjusted total number of building approvals in December dropped 3.3% to 17,753 compared to upwardly revised 7.7% increase in November.

For the year, building approvals climbed 8.8% following upwardly revised 10.2% surge in the previous month.

Australian dollar closed at 78.03 U.S. cents and in stock-trading turnover declined to 691 million shares worth $4.49 billion.

ASX 200 Index jumped 82.10 or 1.5% to 5,707.40 and broader All Ordinaries Index increased 79.70 to 5,666.20.

In commodities trading, gold dropped US$7 to US$1,274 an ounce and light crude oil jumped $3.71 to US$48.24 a barrel.

Brent crude gained 57 cents to close at US$55.32 a barrel.

Australian Stock Movers

360 Capital Industrial Fund dropped 2.9% to $2.67 after the real estate developer said revenues in the first-half ending in December jumped 52.8% to $28.56 million from $18.69 million a year ago period.

Profit in the period surged 72.4% to $14.74 million compared to $8.55 million and diluted earnings per share increased to 12.8 cents from 9.1 cents in the same period a year ago.

Federation Centres Ltd was halted at $3.13 and the shopping center operator signed a merger agreement with rival Novion Property Group to create a real estate investment trust with $22 billion of investments in 102 retail assets.

Navitas Limited was halted at $4.75 and the educational service provider reported total group revenues in the first-half ending in December soared 14% to $480.5 million from $421.9 million a year ago period.

Net profit in the period declined 13% to $31.5 million compared to $36.1 million and diluted earnings per share fell to 8.3 cents from 9.6 cents in the same period a year ago.

The company forecasted underlying EBITDA for the year in the range of $162 million to $172 million.

Transurban Group slipped 0.6% to $9.24 and the toll road operator expects to start construction of a new $2.9 billion nine-kilometer tunnel in Sydney''s north suburb this year with Canada Pension Plan Investment Board.

The tunnel is expected to be completed by 2019.