The strong Australian Dollar continued to gain against the US Dollar after the Reserve Bank of Australia (RBA) increased its borrowing rate to a 12-year high of 7 percent. The 25 basis point rise was the sixth interest rate hike in two years. The Australian Dollar fell for a brief period after the RBA announced the cut as forex traders locked in their gains before the rally. This morning, the high Australian Dollar continued its early rally, almost brushing 91 US cents, close to a three month high. Despite the rate hike, Richard Franulovich, A New York-based senior currency strategist with Westpac doubted the RBA's ability to control inflation. ''A 25 basis point hike is not enough to address inflation,'' he said. ''Could they come out and say they're done and they're comfortable with the policy? No. They've lost control of inflation.''
In forex trading, the Australian Dollar was higher against the US Dollar, trading at 90.70 US cents compared with 90.65 US cents before the rate hike was announced. The strong Australian Dollar is expected to rise further on speculation that inflation cannot be controlled, fueling a further possibility of another rate hike in the near future.
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