Kina weakens vs Aust currency

Business, Normal

THE kina remains under pressure against a much stronger Australian dollar and ANZ Bank has warned of the possibility of domestic inflation if the local currency continues its commanding lead over the US dollar.
Last Friday, the Aussie dollar posted a 14-month high of US$0.9271 although it was corrected later.
At the close of business last Friday, it was trading at US$0.9207 against the greenback.
Fundamental drivers are signalling a higher A$-US$ exchange rate with the market beginning to set its eye on last year’s post-float high of A$1=US$0.9850.
However, a sooner-than-expected rise in global policy rates or a setback on Chinese economic recovery could limit the Aussie unit’s rise, according to ANZ.
The kina continues to surge upward in the interbank market against the US unit and ANZ has predicted a kina-US$ correction toward the end of the year, especially with the festive season approaching and the LNG project set to kick off soon.
“As we approach the festive season in a few months’ time, import demand may force a kina-US$ correction towards the end of this year.
“We may see usual US$ inflows for now and may slow down at year-end and early next year as decision makers take a break.