Australian dollar drops due to stimulus plan rejection

02-12-2009 14:45

AUD fell against the Japanese yen, the US dollar and against the euro today due to the Australian senate refusal of the stimulus package which values $27.4 billion. Kevin Rudd presented fiscal and liquidity measures worth of A$42 billion which would gradually stimulate the economy. This resulted in a growth of the Australian dollar because traders were quite optimistic about the Aussie for several days. The gains erased quickly as a result of the refusal of the plan.

China is Australia´s second largest exporting market and for this reason the decrease of the Chinese imports affected the Australian dollar negatively. After this news the New Zealand currency also decreased and dropped against AUD.

According to currency analysts any delay in approving the stimulus package is a negative indication for a country that could be facing a technical recession soon. It is to be expected that for as long the plan not is approved forex market participants will continue short on AUD.