The Australian dollar has soared to a record high against the dollar.
Key points:The Australian dollar rose above the US dollar on Monday, trading at 97.70 US cents on the ASXThe Australian currency fell to 97.55 US cents after the Federal Reserve cut interest rates and a new interest rate cap was imposed on the Reserve BankThe Reserve Bank will announce the final policy decision on WednesdayThe Australian economy is in “tremendous trouble” after the central bank cut interest rate and a policy cap was introduced on the Bank of Australia.
“The Australian pound has hit a new all-time high against its US counterpart,” the Financial Review reported.
The currency surged to a fresh record high of 97.7 US cents at 9:01am AEST (03:01 GMT).
The Australian Stock Exchange (ASX) also added its first gain of the day, adding to the gains the day before.
The Australian Dollar is now worth 96.1 cents.
The dollar has fallen to a new record high in US trading after the Reserve’s decision on Monday to raise interest rates, which are set to be met by a further cut in the overnight rate.
The Fed said it would be “unlikely” to raise rates any time soon, leaving the door open for a rate rise.
The US Federal Reserve, which has been the central focus of the Federal Budget, has said it will keep its benchmark interest rate near zero for a year.
In Australia, the Reserve has announced that it will cut the overnight interest rate to zero for three months.
The Federal Government also announced it would cut its budget deficit in a $3.2 billion package.
Inflation is expected to remain low in the short term, with the Reserve keeping its target for the inflation rate at 1.5 per cent.
But the Australian dollar will also remain strong for the next year, with an average rate of 97 US cents, or $1.25 per US cent.
The central bank has already cut its benchmark lending rate for the first time in a decade to 0.25pc from 1pc.
It said it had a “fairly good” outlook for inflation in the next two years.