Australian Dollar Falls, BG Bids $3 B

123jump.com Staff
27 Oct, 2008
New York City

The Reserve Bank of Australia intervened to support the falling Australian dollar. The dollar declined to a five-year low against the U.S. dollar and dropped to a fifty three years low against Japanese yen. UK based BG Group is liklely to purchase Queensland Gas for $3 billion in cash.

[R]3:00AM New York, 7:00PM Sydney – The Reserve Bank of Australia intervenes to defend the dollar. Colonial First State suspends withdrawals. Weak commodities and energy prices dragged resource stocks lower.[/R]

Australian stocks fell after investors failed to shrug off mounting recession concerns.

Commodity stocks declined as oil prices continued to trade below $65 per barrel despite the OPEC''s decision to cut output by 1.5 million barrels per day in order to increase prices.

However, realty stocks pared losses as the central bank intervened in the foreign exchange market to defend the value of the local unit and provide liquidity into the market.

Market Sentiment

In Sydney trading ASX 200 declined 1.6% or 60.2 to 3,809.20.

Of the ASX 200 index stocks 36 rose, 152 declined, and 12 remained unchanged. Babcock & Brown led advancers in the index shares with a rise of 23.1% followed by HFA Holdings rising 13.1%.

RBA Supports Australian Dollar

The Reserve Bank of Australia purchased more Australian dollars in the market today to shore up its value and provide liquidity.

The Australian dollar fell to 60.55 cents against the U.S. dollar, the most since April 2003, and declined to 55.10 against the yen, reflecting the lowest level since 1945.

After the intervention, the Australian dollar trimmed losses falling 0.2% to 62.11 cents from 61.26 cents earlier and eased to 58.36 yen from 56.38 yen earlier.

The RBA last intervened in the currency market in August 2007 when the credit crisis began.

Separately, the Canberra Times reported that Treasurer Wayne Swan said the drop in the value of the dollar will help exporters and the tourism industry.

Colonial First State Suspends Withdrawals

Investment fund, Colonial First State suspended daily withdrawals on recent increases in the level of redemptions after the government’s deposit guarantee scheme.

The funds that were affected were the Colonial First State Wholesale Income Fund, FirstChoice Wholesale Income option, FirstChoice Income option, Management Investment Funds-Mortgage Income Fund, Bricks and Mortar Fund, Guaranteed Mortgage Fund and Rollover and Superannuation Fund-Mortgage Option.

According to the investment fund, the move will enable the company “to take a measured approach to processing withdrawals in an orderly fashion"".

Gainers & Losers

Babcock & Brown led advancers in the ASX 200 index shares with a rise of 23.1% followed by rises in HFA Holdings Ltd. of 13.1%, in CFS Retail Property of 13.1%, in Sino Gold Mining of 12.7%, and Commonwealth Property of 12.5%.

Realty stocks rose after the Reserve Bank of Australia purchased the Australian dollar. Valad Property gained 11.5% and Dexus Property soared 8.5%.

Sino Gold increased after gold prices gained by $11 to $732 per ounce.

ING Industrial led decliners in the ASX 200 index shares with a fall of 34.1% followed by losses in GPT Group of 27%, in Kagara Ltd. of 25.7%, in Macquarie Countrywide of 20.3%, and Sunland Corp. of 20.1%.

Commodity stocks declined after oil prices declined 5.4% to $64.15 per barrel despite OPEC''s decision to cut production by 1.5 million barrels per day.

Copper prices also fell to $1.6955 per pound.

Riversdale Mining dropped 14.6%, Roc Oil plummeted 13.5%, and Beach Petroleum shed 11.5%.

NIB Rejects Takeover Offer

NIB reported today that it has rejected an unsolicited offer from an unnamed company that valued the company between $1.15 and $1.20 per share.

On Friday, NIB traded at 63 cents per share valuing the company at $336.62 million.

Commented the health insurer in a statement, “The NIB board is of the view that the principle benchmarks for any NIB change of control event are NIB''s own internal valuation and the transactions recently completed or announced in the Australian private health industry. The NIB board believes that the proposal received from the third party did not reflect these benchmarks.”