Australia’s central bank Governor, Glenn Stevens pushed back the interest rates drop for another month, baffling the traders that expected the cut, and strengthening the Australian dollar.


Only moments before the announcement of the Reserve Bank of Australia, that the 2.25% interest rate will remain in the same level for the next month, the Australian dollar began to rise. The 2.25% cash rate is a record low. Australian dollar went up 1.6%, gaining strength against every single one of the major 31 rival currencies. The majority of the Bloomberg experts predicted the Governor’s decision, while the swap trader were predicting a 75% chance of a cut. Bank of Tokyo-Mitsubishi UFJ Ltd.’s currency strategist, Lee Hardman stated that “The Aussie dollar has been lifted by RBA’s decision to stand pat, but we expect the bounce to be temporary.” The expert in London concluded that “With commodity prices continuing to adjust lower and the RBA likely to still ease further, the currency remains vulnerable.”

Aussie gained about 1% against the dollar, 1.7% compared to Euro, and 1.4% against the Japanese Yen. The Reserve Bank of Australia’s Governor Stevens stated on Tuesday that “Further easing of policy may be appropriate over the period ahead, in order to foster sustainable growth in demand and inflation consistent with the target,” adding that  “The board will continue to assess the case for such action at forthcoming meetings.” Glenn Stevens targeted 75 cents as the preferred exchange rate in the last month of 2014, reported the Australian Financial Review.

The Aussie strengthened against the New Zealand dollar 1.3%, after reaching the 1.0021 NZ dollar on Monday, the historic record low since 1980, when the two dollars were freely floated.