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Aussie dollar drops toward six-year low as China trade slumps
[TOKYO] Australia's dollar fell along with its New Zealand peer after their largest trading partner, China, reported a bigger-than-forecast decline in imports.
The Aussie headed for its steepest drop in two weeks, approaching a six-year low versus the dollar, after China's exports unexpectedly shrank, adding to concerns about the world's second-biggest economy before growth figures due this week. Australia's currency was already declining before the Chinese data with prices of iron ore, the country's biggest export earner, languishing below US$50 per ton.
"The Chinese are importing less from offshore on the basis that the economy isn't growing at the rate that it once was," said Thomas Averill, a managing director in Sydney at Rochford Capital, a currency and rates risk-management company. "That will affect demand for Australian and New Zealand goods and services. As a consequence of that, the Aussie and kiwi are under pressure."
Australia's currency declined 1 per cent to 76.05 US cents as of 12:43 p.m. in Sydney from the end of last week. It reached 75.33 of April 2, the weakest since May 2009. The kiwi sank 0.7 per cent to 74.87 US cents.
China's imports dropped 12.3 per cent in March in yuan terms from a year earlier, more than the median estimate among economists in a Bloomberg survey for an 11.3 per cent decline. Exports tumbled 14.6 per cent, compared with a survey forecast for an 8.2 per cent increase.
The nation's economy probably expanded 7 per cent in the first three months of 2015 compared with a year earlier, economists in another Bloomberg survey estimated before Wednesday's report. That would be the slowest pace since the same period in 2009.