The Australian dollar soared to a 24-year high against the greenback yesterday after a spike in inflation re-ignited expectations interest rates could rise as early as next month.
The Australian dollar was trading at US$0.9505 at 5pm yesterday, up more than US$0.01 on Tuesday’s US$0.9404 and its highest level since 1984.
The rise came after a 1.3 percent surge in March quarter inflation surprised the market, taking the annual inflation rate to 4.2 percent, well up on the Reserve Bank of Australia’s (RBA) 2 percent to 3 percent target range.
Economists said the figure effectively ended any prospect the central bank would cut interest rates, instead increasing pressure for another hike.
Currency markets drove the local currency up to a high of US$0.9514, anticipating the interest differential between Australia and the US will increase, or at least remain stable. The Australian dollar’s highest level against the greenback since the currency was floated in 1983 was US$0.9653, reached on March 16, 1984.
Analysts say if the Australian dollar continues to rise, it could reach parity with the US dollar for the first time since mid-1982, when the currency was still pegged against a basket of currencies.
ANZ market strategist Patricia Gacis said there was widespread expectation that the next move in interest rates would be up, with many tipping a rise could come next month.
“Markets are now pricing somewhere around a 27 percent chance of a rate hike by May,” she said. “That’s a quite dramatic move.”
The central bank lifted rates to a 12-year high of 7.25 percent last month, but earlier this month expressed confidence that an annual rate of 4.0 percent in the March figures would mean inflation was under control in the medium term.
Gacis said the latest figures had put the Reserve Bank back on inflation alert, leaving it poised to lift rates.
“The causes of underlying inflation is clearly accelerating,” Gacis said. “There is now a growing chance that inflation has not reached its peak in Australia.”
“The RBA really have no room for any more upside surprises in inflation in the near term,” she said.
Treasurer Wayne Swan said inflation was unacceptably high and he would attempt to tackle the problem in his first budget, which will be handed down in Canberra on May 13.
“These inflation figures are a stark reminder of the price pressures hitting Australian families, they’re quite sobering,” he told reporters.
“And I think they demonstrate the pain that people are feeling around the kitchen table,” he said.
CREDIT-GRABBER: China said its coast guard rescued the crew of a fishing vessel that caught fire, who were actually rescued by a nearby Taiwanese boat and the CGA Maritime search and rescue operations do not have borders, and China should not use a shipwreck to infringe upon Taiwanese sovereignty, the Coast Guard Administration (CGA) said yesterday. The coast guard made the statement in response to the China Coast Guard (CCG) saying it saved a Taiwanese fishing boat. The Chuan Yu No. 6 (全漁6號), a fishing vessel registered in Keelung, on Thursday caught fire and sank in waters northeast of Diaoyutai Islands (釣魚台). The vessel left Keelung’s Badouzih Fishing Harbor (八斗子漁港) at 3:35pm on Sunday last week, with seven people on board — a 62-year-old Taiwanese captain surnamed Chang (張) and six
RISKY BUSINESS: The ‘incentives’ include initiatives that get suspended for no reason, creating uncertainty and resulting in considerable losses for Taiwanese, the MAC said China’s “incentives” failed to sway sentiment in Taiwan, as willingness to work in China hit a record low of 1.6 percent, a Ministry of Labor survey showed. The Directorate-General of Budget, Accounting and Statistics (DGBAS) also reported that the number of Taiwanese workers in China has nearly halved from a peak of 430,000 in 2012 to an estimated 231,000 in 2024. That marked a new low in the proportion of Taiwanese going abroad to work. The ministry’s annual survey on “Labor Life and Employment Status” includes questions respondents’ willingness to seek employment overseas. Willingness to work in China has steadily declined from
The number of pet cats in Taiwan surpassed that of pet dogs for the first time last year, reaching 1,742,033, a 32.8 percent increase from 2023, the Ministry of Agriculture said yesterday, citing a survey. By contrast, the number of pet dogs declined slightly by 1.2 percent over the same period to 1,462,528, the ministry said. Despite the shift, households with dogs still slightly outnumber those with cats by 1.2 percent. However, while the number of households with multiple dogs has remained relatively stable, households keeping more than two cats have increased, contributing to the overall rise in the feline population. The trend
ESWATINI VISIT: Taipei condemned Beijing’s coercive tactics after Seychelles, Mauritius and Madagascar unexpectedly revoked overflight permits for the president’s aircraft President William Lai (賴清德) has postponed an official trip to Eswatini, after several countries in Africa revoked overflight permits following “intense pressure” from China, a senior aide said yesterday. Lai was due to visit the Kingdom of Eswatini from today to Sunday for the 40th anniversary of King Mswati III’s accession and his 58th birthday. Eswatini is among Taiwan’s 12 remaining diplomatic allies and the only one in Africa. “According to sources, the Seychelles, Mauritius and Madagascar unexpectedly and without prior notice revoked the charter’s overflight permits,” Presidential Office Secretary-General Pan Men-an (潘孟安) told a news conference. “The real reason is that the Chinese
RSS