Australian Dollar strengthens on back of Greece’s austerity plan

The Australian dollar has gained in strength over the last few weeks, and continued to do so this past week coming to rest at 0.68 to the British pound and 0.937 to the US Dollar. This rise can be partly attributed to the passing of austerity measures inGreece, allowing them to qualify for an international bailout. Parliament Speaker Filippos Petsalnikos was cited as saying a total of 199 Greek lawmakers have voted in favor of the plan.

Adam Carr a senior economist inSydneyat ICAP Australia LTD. said that “on the view that Greek legislation would be passed, we could see an upside for the Aussie dollar.”

The Aussie took a slight knock this week after the Reserve Bank announced that it has lowered its forecasts for both growth and inflation this year. The Central Bank has forecast that the economy will expand 3.5% this is substantially less than the previously predicted 4%. This forecast will boost the scope for a reduction in interest rates. Jonathan Cavenagh a currency strategist at Westpac Banking Corporation inSingaporewas cited as saying that the Reserve Bank has an easing bias, which is reflected in the revising of their growth forecasts.

ANZ Bank announced late on Friday afternoon that it would raise the mortgage lending rate by 6 basis points; this will in all likely-hood encourage the other major banks to follow in their footsteps.  Market sentiment seems to be that this will add pressure for the Reserve bank to cut interest rates.

GBP/AUD:     1.4760
EUR/AUD:     1.2362
AUD/USD:     1.0673
AUD/JPY:     82.8619

Exchange Rates at 09:19, 13 February 2012

Composed by Monique Chapman::
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