You are here
Aussie climbs as Chinese officials signal confidence in economy
[TOKYO] Australia's dollar rose from a six-year low against the U.S. currency after Chinese officials signaled confidence in their economy at a gathering of Group-of-20 finance chiefs.
The Aussie gained versus all of its 16 major counterparts after People's Bank of China Governor Zhou Xiaochuan said in a statement Sept. 5 that local stocks and the yuan were stabilizing. The yen weakened for the first time in three days as demand for havens diminished.
"Zhou's comment out of the G-20 that the stock market correction was almost done was very bold, and may have investors unwilling to bet against the PBOC chief's view," said Ray Attrill, co-head of currency strategy at National Australia Bank Ltd. in Sydney.
"It looks like reduced fears of a fresh China- led market meltdown has somewhat reduced the strength of the safe-haven bid, and taken some of the immediate pressure off Aussie." The Australian dollar advanced 0.4 per cent to 69.35 US cents as of 9:10 am London time after dropping to 68.96 cents, the weakest level since 2009. The Aussie tumbled 3.7 per cent last week.
The yen dropped against most of its major peers, falling 0.2 per cent to 119.28 per dollar and declining 0.3 per cent to 133.11 per euro.
The Shanghai Composite Index of shares fluctuated between gains and losses as Chinese markets reopened after a two-day holiday. It closed 2.5 per cent lower. Europe's Stoxx 600 Index climbed 0.7 per cent.
Markets Relieved China worked to soothe concern over its economy at the weekend G-20 gathering in Ankara, Turkey. Zhou said state intervention in the equity market prevented systemic risk and stopped the free-fall in shares. The PBOC's unexpected devaluation of the yuan on Aug. 11 spurred a rout that wiped more than US$8 trillion from the value of equities worldwide.
"The first reaction to the Chinese open is relief," said Yuji Saito, executive director of foreign exchange at Credit Agricole SA in Tokyo.
"Whether this will hold or not remains to be seen. Officials' comments must also be watched."