Australian Dollar spirals down as Ferguson declares end of mining boom
AUSTRALIAN DOLLAR REVIEW | Markets react to minister’s comments following suspension of BHP Olympic Dam project.
AUSTRALIA’S Resource and Energy minister Martin Ferguson declared the end of the country’s mining boom on Thursday. His controversial comments came following the announcement by BHP that it was delaying indefinitely the planned Olympic Dam expansion project.
Markets reacted immediately, sending the Australian Dollar into a downward spiral at the end of the week.
Finance Minister Penny Wong sought to temper the controversy by suggesting that the boom had peaked, rather than ended. “I think the mining boom still has a long way to run,” she said.
The Australian Dollar had opened strong last week against the US Dollar with RBA data suggesting domestic economic growth overshadowed a fragile global outlook.
The strengthening of the Aussie continued mid-week after the US Federal Reserve signaled that they may again be inching closer to further policy easing. The very poor PMI (Purchasing Managers Index) figures out of China didn’t appear to have much impact on the rising Australian currency.
Thursday and Friday didn’t see any favors being thrown to the Aussie, however. The dollar declined to its lowest level this month on the back of Ferguson’s comments with RBA Governor Glenn Stevens saying the currency would suffer heavily if the nation’s mining boom were to collapse.
This week will be a trying time for the Aussie as investors search for fresh clues on the pace of global growth, while Europe is still struggling to find a credible solution to its debt crisis. The European Central Bank policy makers are only set to gather again in September, when it is expected they will announce the limits on government bond yields to help contain the region’s debt crises.
AUS/ GBP: 0.6568
AUS/ EURO: 0.8303
AUS/ USD: 1.0386
AUS/ JPY: 81.556823
Exchange rates on 24 August 2012