SYDNEY, August 11, 2008 (AFP) – The plunging Australian dollar hit a new seven-month low on Monday as a fall in key commodity prices put the currency under pressure, ending months of highs.
The currency opened at 88.49 US cents, down from 89.29 US cents on Friday and its weakest start since January 25.
The Australian unit, which in July briefly broke through the 98 US cent barrier amid talk of it reaching parity, fell after crude oil in New York dropped four percent to 115.20 dollars a barrel and gold also declined.
“The continued fall in crude oil and commodity prices has knocked the wind out of the Aussie’s sails,” Bank of New Zealand currency strategist Danica Hampton told the Australian Associated Press.
The US dollar also rose overnight.
The Australian currency could lose further ground on Monday if the Reserve Bank of Australia’s quarterly monetary policy statement persuades the market that interest rates are likely to be cut in September. The commodities-driven Australian dollar had been gaining strength for more than a year amid a global boom in commodity prices and as the US dollar weakened.