The Australian Dollar weakened on a government prices report as the likelihood of the Reserve Bank of Australia (RBA) raising interest rates falls. The fall is the most in more than seven months and is also the biggest change out of any currency today. The government report showed that prices have decreased for the first time in eight years and has helped ease speculation that the RBA will raise interest rates early this year, despite already raising them three times in 2006. On another note, the interest rate hikes of 2006 have assisted the Australian Dollar in acquiring a 7.6 percent increase which is the highest increase since the year 2003. ''The Australian dollar had been supported by expectations of further rate rises,'' said Adam Carr, senior economist at UBS AG in Sydney. ''With tame inflation, that story isn't going to hold any more.''
In the foreign exchange, the Australian Dollar fell 1.2 percent to 78.34 U.S. cents this afternoon in Sydney from 79.20 cents just before the report. The Aussie Dollar traded at 79.18 U.S. cents yesterday during late Asian trading.
Other economic slowdowns include a slower pace in retail sales, a drop in home approvals and also an 0.3 percent economic growth in the third quarter, which is the slowest in three years due to reduced farm output.
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