The Australian dollar dipped below US93¢ for the first time in a week, dropping after a weakening yen and as the Reserve Bank of Australia (RBA) continued its mild jawboning of the currency.
The local currency started its descend shortly after 11am AEST, declining from US93.35¢ in early morning trade to US92.85¢ within 30 minutes as it shadowed a similar drop in the Japanese currency against the US counterpart.
The dollar hardly reacted to a spate of economic data, including second-quarter current account balance and July building approvals. The current account deficit blew out to $13.7 billion, from $7.8 billion in the first quarter, while building approvals rose 2.5 per cent month on month. Both sets of data more or less met economist expectations.
The fall in the Australian dollar was also a reason of the Reserve Bank's widely expected decision to keep the cash rate on hold for a 12th consecutive meeting.
Governor Glenn Stevens in his statement explaining the decision reiterated the currency remains too high.
"The exchange rate ... remains above most estimates of its fundamental value, particularly given the declines in key commodity prices. It is offering less assistance than would normally be expected in achieving balanced growth in the economy," Mr Stevens said.
Westpac chief currency strategist Robert Rennie said the sudden sllde in the Australian dollar earlier in the day was driven by the weaker yen against the greenback, affecting the Australian and Japanese cross rates.
"The Japanese demand for the Aussie has been dwindling as it is getting too expensive", Mr Rennie said.
On Tuesday afternoon the yen dropped from US0.9586¢ around 10.30am AEST to US0.9536¢.
Mr Rennie said a series of business surveys indicating weak Japanese gross domestic product print triggered the fall of the Japanese currency against the US dollar, which in turn reduced the Japanese demand for the Aussie.
"As we wander through early September you start to get business surveys that give you a reasonable sense of GDP. Those are fairly closely watched," Mr Rennie said.
On Westpac numbers the Australian dollar is forecast to hit $US90.00¢ by the 2014 end before starting recovery next year.
