Banks led the market gains, with Westpac’s 1.3 per cent rise the standout.
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At 1700 AEST on Friday, the currency was trading at 72.28 USA cents, up from 71.85 cents on Thursday.
For the second straight week, average long-term U.S. mortgage rates inched up this week as financial markets awaited the Federal Reserve’s crucial decision on interest rates.
The dollar index, which measures the greenback against six major currencies, was down 0.30 percent at 95.325 in late trading.
Some strategists believed the implications from the Fed’s updated forecasts and its policy statement were more hawkish than the market’s reaction would suggest.
Briefing.com said the consensus estimate was the rate would be unchanged.
Westpac is forecasting the Reserve Bank cuts the OCR again in October and December, eventually pushing the benchmark rate down to a record low 2 percent.
However, the other 50% feel that the Fed’s policy steering team will decide that, given the increasing evidence of a real slowdown in the Chinese economy, it’s just too early for an American interest rate hike.
The yield on India’s 10-year benchmark bond closed at 7.697%, a level last seen on 1 June, compared with its Wednesday close of 7.755%.
The prospect of loose monetary conditions for longer reignited investors’ appetite for risk, and high-yielding riskier currencies such as the Australian and Kiwi dollars gained sharply.
“The effect from the decision [by the Fed] on the capital flow will not be severe, as the question [when will U.S. rates rise] still remains and its direction did not change”. “The New Zealand dollar is reluctant to rally against the USA dollar”.
African central bankers were closely watching <strong>the Fedstrong> ahead of a <strong>ratestrong> setting meeting this week as local currencies, which have mostly fallen against a globally stronger dollar this <strong>yearstrong>, slid further on speculation the U.S. bank will <strong>hikestrong> interest ratesstrong> for the first time in nine years as its <strong>economystrong> recovers.
Currencies in India, Malaysia, Japan, Taiwan and South Korea had strengthened by 0.88, 0.58, 0.49, 0.36 and 0.27 per cent respectively as of 2.30pm.
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The domestic unit resumed firmly higher at 66.15 as against Wednesday’s closing of 66.46 at the Interbank Foreign Exchange (Forex) market and kept moving higher following heavy dollar unwinding by foreign banks and speculative traders before concluding at 65.67, showing a healthy gain of 79 paise, or 1.19 per cent.
