Dollar Skids To Month-low

Dollar skids to month-low November 20, 2008 - 3:10PM
The Australian dollar skidded to one-month lows on Thursday as equities took another beating, overshadowing news the country's central bank bought a record amount of the hapless currency last month.
The dollar slid to $US0.6344, having been as high as $US0.6597 offshore before US equities sank. It also fell to 60.37 yen, from a 63.86 yen peak, as investors fled all risky assets to the perceived safety of the yen and US Treasuries.
Fears that a deep global recession is now inevitable and could soon spill over into corporate defaults, hammered stocks in the United States and Asia.
The S-P ended down over 6% while the Nikkei lost 6% and the local market shed 4%. The latter is now down 50% from its all-time peak hit just last November.
The extent of the slowdown underway globally was underlined by figures showing Japan's exports to Asia suffered their first fall in seven years in October.

That was bad news for Australia as Japan is the single largest buyer of its resources.
Given all this gloom, it was hard for the Reserve Bank of Australia (RBA) to offer much support, particularly as investors expect it to cut interest rates sharply next month.
Figures out Thursday showed the central bank had stepped in to buy $3.15 billion in October as the currency collapsed to 60 US cents amid global market turmoil.
The was the largest monthly purchase ever and, at the time, equalled almost 10% of its entire reserves.
'It's a jaw-dropping number,'' said Sean Callow, senior currency strategist at Westpac.

'It's a lot more than we expected and even larger than it's intervention during the Asian crisis,'' he added. 'It shows just how illiquid and dolphin massage chair difficult markets were in October.''
However, analysts felt its reserves of just $US44 billion were far too small to hope to actually defend a particular level.
RBA Governor Glenn Stevens late Wednesday tried to be upbeat on the long-term outlook for Australia, and China for that matter. But he also left the door wide open for more cuts in interest rates.
Bill futures climbed yet further as the market priced in a rate cut of at least 75 basis points in the 5.25% cash rate at the December meeting, and office massage chairs further drastic easing to at least 3.5% next year.
Likewise, three-year bond futures jumped 0.110 points to a fresh all-time high of 96.370, while the 10-year contract rose 0.110 to 95.265.
Treasuries were even stronger as US consumer prices fell a steep 1% in October and the Fed signalled a willingness to ease again.
Two-year Treasury yields fell to their lowest since 1976 while the spread between AustralianUS 10-year yields widened out to 145 basis points.

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