China reforms boost Aussie dollar

Published: 19 Nov at 9 AM Tags: Euro, Dollar,

The New Zealand dollar and the Australian dollar were given a boost on Monday against the yen and the US dollar as investors in the stock market celebrated economic reform plans in China. Shares in China posted their largest gains in two months as Beijing announced sweeping social and economic reforms.

However, analysts are predicting that although currencies linked to the success of the Chinese economy like the Aussie dollar may see some support at the moment, they could come under pressure over the longer-term.

The Aussie is currently up 0.4 per cent against its US counterpart at $0.9402. The Kiwi dollar is also up to $0.8373. Both currencies tend to do well when the Chinese economy is expanding and both were also up against the yen.

In contrast the euro, yen and dollar remained soft. Investors are currently concerned over how long the currencies will keep monetary stimulus plans in place. The US dollar has come off highs after the Federal Reserve Chairman elect announced last week that the central bank is likely to keep its stimulus plan in place for the foreseeable future.

Rates are likely to stay low at the European Central Bank and the Bank of Japan is also surging ahead with its ultra-loose monetary policy.