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$A lower over Ukraine fears

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Published on: Friday, March 14, 2014

by AAP

The Australian dollar is lower as investors practice caution ahead of a controversial referendum in Ukraine's Crimea region.

At 1700 AEDT on Friday, the currency was trading at 90.03 US cents, down from 90.51 cents on Thursday.

The currency moved lower overnight on Thursday as Russia moved more troops to the Ukrainian border, ahead of Sunday's referendum that could see the Crimea region become part of Russia.

The US and the European Union have threatened fresh sanctions if the vote is allowed to go ahead.

"I think people are just waiting to find out what might happen in the Ukraine over the weekend," Commonwealth Bank currency strategist Joseph Capurso said.

But he said the currency had held up relatively well given the sharp falls in equity markets across the world.

One factor holding the Aussie dollar up could be market action by the People's bank of China, which many traders believe has been buying US dollars recently to bring down the value of its currency, the Renminbi.

"Usually when you get theses big falls in equities markets you see the Aussie dollar fall," he said.

"We think one reason the Aussie might be holding up is because the People's Bank of China may be recycling some of their US dollars into Aussie dollars and euros and other currencies."


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