Aussie dollar to fall, interest rates steady

Foreign exchange specialist OzForex predicts the Australian dollar is due for a downward spiral, while interest rates will remain steady.

OzForex believes the volatility of the Australian dollar against other major currencies will continue to subside.

Jim Vrondas, manager of corporate business at OxForex, said they expect the “downward trend in volatility to continue throughout the remainder of the calendar year and into 2010, which suggests that the AUD may be due for some downward correction in coming months.”

The Sydney-based foreign exchange company also believes forecasts for interest rate rises in November and December are premature, with the RBA unlikely to raise rates until the first quarter of 2010.

“We believe the RBA will be waiting for an uptick in inflation before considering a rate rise from the current historical lows of 3 percent,” Vrondas said.

“Increasing rates at this point would be a dangerous act that could hinder any further economic growth and push the headline inflation rate even lower,” he added.

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