Sky News - Portugal: Review For Bailout Money Completed

Amid growing austerity pains the Portuguese government says its bailout review is complete, ahead of the next EU-IMF tranche.

Disquiet has spread in Portugal over austerity measures imposed

Portugal's government has said its EU and IMF lenders have concluded work on the latest bailout review, ahead of Lisbon’s receiving its next rescue tranche.

It indicated that there were no outstanding obstacles for Lisbon to receive the next 2bn-euro (£1.68bn) lifeline.

The review, which had been practically sealed in March, hit a snag early last month when the constitutional court threw out some of this year's austerity measures.

But the government presented a plan to compensate for those, along with wider deficit reduction steps until 2015 worth 4.8bn euros (£4bn).

Representatives of the lenders were in Lisbon last week to pore over the spending cuts.

"The cabinet met today to be briefed on the completion of the works related to the seventh evaluation and confirm the conditions necessary to seal it," the government said in a statement after an extraordinary cabinet briefing.

Finance minister Vitor Gaspar will present the final terms at the meetings of EU and eurozone finance ministers that begin in Brussels on Monday, it said.

By getting its deficit-reduction plan back on track, Portugal also expects to get a full EU approval this week for an extension of its rescue loan maturities, which is aimed and helping it regain full access to the debt market.

Portugal last week issued its first 10-year bond since the bailout, which brought its debt yields to their lowest levels since 2010.

Still, concerns remain over the country's deep recession, growing opposition to the austerity programme mandated under the bailout and unemployment levels.

BBC News - Cyprus receives EU-IMF bailout funds

Cyprus has received the first instalment of a 10bn-euro bailout package from international creditors, which was agreed earlier this year.

There is still domestic opposition to the international bailout in Cyprus

Cyprus received 2bn euros (£1.6bn; $2.6bn) in loans, said a statement by the European Stability Mechanism.

Another 1bn euros will be transferred before 30 June, the ESM said.

Eurozone finance ministers are also expected to sign off the latest tranche of Greece's bailout, as it continues to struggle to reform its economy.

Another topic on the agenda at their meeting in Brussels is Slovenia, which is seen as potentially likely to follow Greece and Cyprus in seeking help from European authorities.

Concerns are growing despite a plan unveiled last week by Slovenia's government, aimed at avoiding a bailout.

The government plans to restructure the country's stricken banking system, raise taxes and privatise swathes of state-owned companies.

Meanwhile, Greece is expected to receive as much as 7.5bn euros in the latest payment of its massive 240bn-euro bailout, first agreed in 2010.

It needs the money to pay wages, pensions and bondholders.

Earlier this month, the International Monetary Fund (IMF), one of the "troika" of international lenders behind the bailout, said Greece had made "progress" in tackling its budget deficit over the last three years.

But it also said structural reforms to the economy had been "insufficient" and problems of tax evasion had not been addressed.

Further austerity measures have been a condition of Greece receiving the latest instalments of its bailout.

German caution

In a separate development, Germany's finance minister has warned again that a single EU bank rescue authority backed by a bailout fund was not viable without overhauling EU treaties.

Existing EU treaties "do not suffice to anchor beyond doubt a new and strong central resolution authority," Wolfgang Schaeuble wrote in the Financial Times on Monday.

European officials have called for a strong central authority, backed by a European rescue fund, to decide on what to do with failing banks.

This, they say, is key to establishing a "banking union" that would, in theory, stabilise the financial system in the region.

But Mr Schaeuble said that promises to create an authority quickly without changing treaties would cost the EU credibility.

"We should not make promises we cannot keep," he said. "Amending the treaties takes time."

Instead, he proposed that national agencies should co-operate with each other to oversee bank rescues.

This would result in a "timber-framed, not a steel-framed, banking union", but it would buy time until treaty changes are made.

The European Commission, the EU's executive arm, is working on a proposal for a mechanism to deal with failing banks, which it plans to unveil next month.

Bloomberg News - Central Banks Keep Easing After 511 Cuts Fail to Spur Growth

Central Banks Keep Easing After 511 Cuts Fail to Spur Economies

Simon Dawson/Bloomberg

A sculpture is seen on the main entrance of the Bank of England in London. The G-7 meeting is “an opportunity to consider what more monetary activism can do to support the recovery, while ensuring medium-term inflation expectations remain anchored,” U.K. Chancellor of the Exchequer George Osborne said in a statement today.

By Simon Kennedy & Jennifer Ryan

Global central bankers are poised to ease monetary policy even further after a wave of interest-rate cuts from India to Poland.

As Group of Seven finance chiefs gather in the U.K. today with monetary policy on their agenda, economists at Morgan Stanley and Credit Suisse Group AG are among those predicting policy makers will keep deploying stimulus amid weak global growth, slowing inflation and the need to thwart currency gains.

“Most central banks in our coverage universe still have a bias to ease,” Morgan Stanley economists led by London-based Joachim Fels said in a report to clients yesterday. “Given this disposition, it doesn’t take much in terms of downside surprises in growth or inflation to tip the balance for more central banks to pull the trigger for more easing.”

South Korea’s rate cut yesterday was the 511th reduction worldwide since June 2007, according to Bank of America Corp.’s tally, done before Vietnam and Sri Lanka today said they’re lowering their policy rates. While the liquidity has sent stock markets surging, it has yet to prove as effective in generating economic growth.

‘Best Friends’

“Central banks are our best friends not because they like markets, but because they can only get to their macro objectives by going through the markets,” Mohamed El-Erian, chief executive officer at Pacific Investment Management Co. in Newport Beach, California, said in a May 8 telephone interview. “The hope is that improving fundamentals will validate what central banks have done.”

Equities are rallying amid the easy monetary policy. TheStandard & Poor’s 500 Index (SPX) set a record level this week and the Dow Jones Industrial Average last week climbed to 15,000 for the first time. In Europe, stocks have also risen and even the yields on the 10-year notes of crisis-torn Greece have slipped below 10 percent. Meantime, Japanese stocks also jumped today as the yen weakened beyond 101 per dollar for the first time in four years.

The G-7 meeting is “an opportunity to consider what more monetary activism can do to support the recovery, while ensuring medium-term inflation expectations remain anchored,” U.K. Chancellor of the Exchequer George Osborne said in a statement today.

The Bank of Korea lowered its benchmark to 2.5 percent from 2.75 percent. That surprise shift followed an unexpected reduction from Poland’s (POPERATE) central bank to an all-time low of 3 percent. Sri Lanka today took its two main rates down by half a percentage point, surprising economists surveyed by Bloomberg News, while the Vietnamese central bank’s refinance and discount rates will drop 1 percentage point each on May 13.

Australia, India

The Reserve Bank of Australia cut to a record 2.75 percent this week, while the European Central Bank and Reserve Bank ofIndia acted to ease last week. Although the Bank of Japan and the U.S. Federal Reserve refrained from changing policy at their last meetings, the BOJ doubled its monthly bond purchases in April and Fed policy makers last week raised the prospect of increasing their pace of bond buying above $85 billion a month.

The Bank of England likewise refrained from adding to stimulus yesterday, keeping its target for asset purchases at 375 billion pounds ($581 billion) and its interest rate at 0.5 percent.

Growth Struggle

Behind the stepped-up stimulus: Another swoon in the global economy barely five years after it fell into its deepest recession since World War II. A Citigroup Inc. gauge shows economic data in major economies began coming in below forecasts in the middle of March and the index is now near its weakest since last August.

With commodity costs in decline, the lackluster growth is also weakening inflationary pressures, forcing central banks to protect against further disinflation. JPMorgan Chase & Co. economists predict global inflation will fall to 2.3 percent in the current quarter, from more than 3 percent at the start of 2012.

As Japan’s (BOJDTR) monetary easing drives down the yen, nations including Australia, New Zealand and Switzerland are also moving to counter climbing currencies before they hurt their exporters. Sweden’s Finance Minister Anders Borg said May 7 that the central bank should consider the strengthening krona.

Maxed-out budgets mean governments are also struggling to aid their economies, with those inEurope having to ease their austerity drive. U.S. Treasury Secretary Jacob J. Lew will tell the G-7 that nations should focus on spurring domestic demand, according to a Treasury official.

More Coming

“Taken together, global factors seem to have become more relevant for central banks,” the Morgan Stanley economists said. “There is likely more to come from various central banks.”

Fels’s team at Morgan Stanley says that the ECB may move anew after President Mario Draghi said “we are ready to act again” if necessary, and that the Bank of England may try to ease more once Mark Carney becomes governor in July. Elsewhere in the world, Morgan Stanley sees added rate cuts in Australia, Poland, Turkey, Israel, Russia and maybe Hungary.

In Asia, Credit Suisse economist Robert Prior-Wandesforde told clients yesterday that India andTaiwan may deliver more easing and that the Philippines may reduce the rate it pays on special deposit accounts. There is also an increasing likelihood that China could cut borrowing costs soon, according to Australia & New Zealand Banking Group Ltd.

Standing Pat

Less sure is Paul Donovan, global economist at UBS AG in London, who says major central banks either have no need to act again -- as in the case of the Fed -- or will stand pat because they are having little effect -- as with the ECB (EURR002W). The Frankfurt-based ECB will refrain from cutting rates until at least 2015, according to the median of 18 forecasts in a survey of economists.

“We’re probably not static exactly, but the momentum for further easing is inevitably slowing,” Donovan said.

Some central bankers are also signaling irritation with having to drive the recovery effort unassisted. Philadelphia Fed President Charles Plosser told Bloomberg Television yesterday that it is “disturbing” to him that “more and more is being expected of central banks.”

“We are expected to solve all the world’s problems,” Plosser said. “Our fiscal authorities are not doing a very good job in any country.”

Plosser, who doesn’t vote on the policy-making Federal Open Market Committee this year, has called for the Fed to slow its pace of bond buying. The FOMC voted last week to press on with purchases and raised the possibility of increasing them in response to changes in the labor market or inflation.

‘Most Inappropriate’

While he called the Fed’s easing “the most inappropriate monetary policy in the world,” billionaire hedge-fund manager Stanley Druckenmiller said May 8 that “there are no conditions currently for a major bear market.”

A Fed panel of bankers warned policy makers in February that their aid for the economy was pushing financial institutions to take on more credit risk and creating a “bubble” in the price of U.S. farmland, according to minutes of the meeting obtained this week by Bloomberg News.

Even with such exuberance, central banks may still fail to rally the global economy beyond a growth rate of 3 percent, below the average of as much as 4 percent in the years before the financial crisis, said Andrew Kenningham, an economist at Capital Economics Ltd. in London.

Fiscal contraction, the need for households and companies to pay off debts and Europe’s broken banking system will offset the easier monetary policy, he said.

The market moves put further pressure on central banks to manage their communications when they do start to withdraw their support for the economy, said Julian Callow, chief international economist at Barclays Plc in London.

“This is like you’re a child on a roundabout spinning around, you can’t suddenly stop this, you have to phase in the exit,” said Callow. “They are really dominating markets, and there’s a real danger they could disrupt them even with what might seem moderate moves.”

BBC News - Yen breaches 100 threshold mark against US dollar

The Japanese currency has breached the 100 yen to the US dollar mark for the first time since April 2009.

It broke the threshold in New York on Thursday and was trading close to 100.8 yen to a US dollar in Asia on Friday.

The yen has fallen nearly 25% against the US dollar since November, after Japan unveiled a series of aggressive moves to spur growth in its economy.

The drop has helped boost exporters' profits and triggered a rally in the country's stock market.

The Nikkei 225 index rose nearly 3% on Friday. The benchmark index has surged more than 55% since November last year.

The Japanese currency has come close to the 100 yen to the dollar mark in recent days, but has been unable to breach that level.

Analysts said that on Thursday, strong data out of the US, which showed that first-time applications for unemployment insurance had fallen to the lowest level in more than five years, had helped the yen pass the mark.

The data triggered hopes of a sustained recovery in the US economy, they said, resulting in investors ditching safe-haven assets such as the yen in favour of the US dollar.

"A stampede out of safety and brightening US job prospects helped catapult the dollar over the key triple-digit threshold against the yen," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

Aggressive measures

Japanese policymakers have taken various measures as they try to revive the country's sluggish economy.

A key policy initiative has been the Bank of Japan's decision to set a target inflation rate of 2%.

Unlike other economies in the region, Japan has been fighting deflation - falling prices - for most of the past two decades. That has dampened domestic demand as consumers and businesses have been putting off purchases in the hope of getting a cheaper deal later on.

Earlier this year, the central bank announced that it would double the country's money supply and buy long-term bonds to keep interest rates low.

The idea was that with more money in the system, and at a cheap rate, more people would have cash to spend, driving up consumer demand and eventually consumer prices.

All these measures have resulted in the yen weakening significantly over the past few months.

A weak yen bodes well for Japanese exporters. It not only makes their goods cheaper to foreign buyers, which should help boost sales, but also lifts their profits when they repatriate their foreign earnings back home.

The latter impact is already being felt by Japanese firms.

Over the past few days, leading exporters, such as Toyota and Sony, have reported a jump in profits, courtesy of a weak currency.

And with the yen expected to remain weak in the medium term, they have forecast a further jump in profits in the current financial year.

Double-edged sword?

However, some analysts have warned of the risks associated with these aggressive measures and the yen's continued weakness.

They say that if Japan's economy does not start showing signs of recovery, and with interest rates in the country close to near zero, it may see a rise in "carry-trades".

This happens when traders around the world borrow yen at very low interest rates and use it to buy currencies to invest in countries where interest rates are higher.

Such trades have no impact on the real Japanese economy, but they result in the yen weakening further.

That would not bode well for Japan, not least because the country has seen its fuel imports rise in recent times, after almost all of its nuclear reactors were shut in the aftermath of the earthquake and tsunami in 2011.

"Every decline in the yen against the US dollar means Japan is paying for more for its energy needs - it's a steep rise in costs for everybody," said Sean Callow, senior currency strategist at Westpac.

Mr Callow said that while a weak yen would help boost profits of exporters, the rise in energy costs "would offset some of those gains".

At the same time, there are also concerns that if investors start to fear that the currency may keep on weakening, they may start to withdraw their savings and invest outside Japan.

That would not only put further pressure on the yen, but also see deposits in Japanese banks dip.

Some analysts have warned that in a worst-case scenario Japanese banks may not have enough cash to buy government bonds. As a result, the government may not be able to raise enough fresh money for its regular operations as well as to repay its debt.

"In that scenario the government will either face bankruptcy or the Bank of Japan will have to keep printing more money, which will eventually result in hyperinflation," said Takeshi Fujimaki, of Fujimaki Japan.

Hyperinflation involves price increases running out of control as a currency collapses in value.

"This is good for the government as the value of its debt will shrink immensely, but it will be miserable for the Japanese people as the value of their savings will erode," said Mr Fujimaki.

Reuters News - G7 to review impact of Japanese action on domestic demand: U.S.

By Anna Yukhananov

WASHINGTON | Wed May 8, 2013 1:31pm EDT

(Reuters) - The United States will focus on ways Europe can boost demand and on Japan's aggressive monetary policy during upcoming meetings of the Group of Seven finance ministers and central bankers, a U.S. Treasury official said on Wednesday.

The U.S. agenda for the G7 gathering, to be held in Britain this week, mirrors the agenda Washington brought to recent Group of 20 meetings, with an emphasis on the need for reviving growth in the euro zone, which has slipped back into recession.

"Strengthening European demand is the most important immediate imperative in reviving growth in advanced economies, and thereby global growth," the senior official told reporters, speaking on condition of anonymity.

Washington will also keep pressure on Japan, which shocked global markets last month when its central bank launched a massive bond-buying program to prod the economy out of decades of stagnation. The policy has sharply undercut the value of the yen, and refueled debate about competitive currency devaluations.

"We're closely monitoring the extent to which recent actions (in Japan) are providing support to domestic demand, and look forward to further definition of the government's plans to push ahead ambitious structural reforms," the official said.

The U.S. official said Europe can do more to boost demand in surplus economies such asGermany, and should also slow down the pace of austerity in debt-ridden euro zone countries to avoid crimping the recovery.

"It's important to recalibrate the pace of fiscal consolidation. Continued sharp fiscal consolidation risks undermining demand," the official said, adding that the United States welcomed signs thatFrance, Spain and the Netherlands got more time to meet the European Union's deficit targets.

The United States will also continue to push Europe to move toward a full banking union in the euro zone, a key issue U.S. Treasury Secretary Jack Lew brought up during his first official trip to Europe in April.

"We are seeing continued and perhaps renewed discussions on moving to banking union," the senior U.S. official said. "We welcome those discussions."

(Additional reporting by Alister Bull; Editing by James Dalgleish)

Reuters News - Analysis: Hedge funds in search of distress take a look at Detroit

By Tom Hals

Wed May 8, 2013 1:07am EDT

(Reuters) - In the past two decades, a group of specialized hedge funds have transformed corporate bankruptcies, injecting much-needed capital while at the same time drawing fire as "vultures."

Now these same funds may be poised to descend on another landscape: struggling cities and counties - and no place beckons more than Detroit.

This sudden interest in the staid world of municipal debt comes as these so-called distressed funds are looking for new places to put their money. Lucrative corporate bankruptcies have dried up, thanks in part to the Federal Reserve's policy of low interest rates.

Of course, these hedge funds may be deterred by the financial and political constraints of local governments, which must pay police and collect trash and cannot be forced into liquidation.

But despite the risks, some are already betting hundreds of millions of dollars that there are big returns in cash-strapped governments.

Monarch Alternative Capital, which played a major role in the bankruptcyof Twinkie-maker Hostess Brands Inc, and several other funds have scooped up more than $600 million of debts of Jefferson County, Alabama, according to court records.

But nowhere is attracting more attention than Detroit.

With $8.6 billion in long-term debt, Detroit would be comparable to the biggest corporate failures if it eventually files for bankruptcy, a major advantage for big hedge funds that are used to investing hundreds of millions of dollars at a time.

The sheer size of Detroit's debt should make it easier for the funds to track down very large chunks of bonds, magnifying their profit potential, cutting their research and advisory costs and giving them leverage when it comes to restructuring talks.

Bill Nowling, a spokesman for the city's emergency manager, Kevyn Orr, said the city is still assessing its approach to its financial turnaround and said he was not aware of any contact with potential hedge fund investors.

Detroit was once America's fifth largest city and a thriving center of U.S. industry. Now, its population has plummeted to 700,000 from a peak of 1.8 million, a third live in poverty and basic services such as street lighting have broken down. Michigan Governor Rick Snyder appointed Orr, a corporate bankruptcy expert, in March to take over the city's finances.

Even if the city does not file for bankruptcy, its debt will likely be restructured, providing an opportunity for hedge funds to make a profit.

ROADS TO DETROIT

Financial advisers, restructuring consultants and lawyers who work with the funds have told Reuters they have been fielding calls, digging through documents and even flying to Detroit as they try to pinpoint a profitable investment.

"Everyone is looking for ways into Detroit. It's new and unique," said Marti Kopacz, who founded Brant Point Advisors, which provides turnaround advice to municipal governments.

One of the normally secretive distressed debt fund managers confirmed the funds are circling the Motor City.

"Detroit is something we as well as other funds have looked at," said Alan Mintz, the founder of Stone Lion Capital, which was spun out of Paul Tudor Jones's Tudor Investment Corp.

Like Monarch, Stone Lion has bought tens of millions of dollars of Jefferson County's debt and has also been involved in the bankruptcy of Eastman Kodak Co, among other big corporate failures.

The hedge funds' interest in municipal debt reflects the divergent fortunes of Wall Street and Main Street.

Distressed debt funds love to jump in when most bail out. But with the coffers of U.S. companies overflowing with cash, there has been a dearth of the debt defaults, bankruptcies and liquidations that such funds normally feast on.

By contrast, a small but potentially growing number of U.S. cities and towns are struggling with pay and pension obligations that they took on in the boom years. As well as Jefferson County, the California towns of Stockton and San Bernardino have recently filed for bankruptcy.

Distressed debt investing has been one of the most successful hedge fund strategies over the past decade. Funds such as Oaktree Capital Management and Appaloosa Management buy large portions of a company's debt and use teams of top-flight lawyers and advisers to control a bankruptcy.

In the Chapter 11 of Visteon Corp, hedge funds scooped up the car part maker's bonds at pennies on the dollar and raised $1.6 billion to pay off the company's secured lenders, who had expected to own the reorganized company. The hedge funds ended up controlling Visteon, notching up large profits.

WAYS TO INVEST

Hedge funds are considering various approaches when it comes to local governments, including asset sales and loans, but in the case of Detroit the bonds are the big draw.

"If Detroit's debt goes way, way down in value they will snap it up in the market and work for solutions that might help get Detroit back on its feet," said Lewis Feldman, who heads the public-private development practice at the law firm Goodwin Procter.

Earlier this year, a $25 million block of Detroit's pension certificates traded at around 66 cents on the dollar. The buyer is unknown, but Matt Fabian of the Municipal Market Advisors research firm suggested it could be a sign of hedge fund involvement.

Explaining one hypothetical strategy, Fabian estimated that hedge funds could make a great return by negotiating repayment from Detroit as low as 80 cents on the dollar on those certificates.

While that would sting investors who bought the same debt at par, it would obviously help Detroit.

"They would do good for the citizens of Detroit and their own pocket," Feldman said.

Fabian said a discounted repayment might chip away at the long-standing belief that muni bonds, even ones issued by a bankrupt government, are always repaid at par. That could send debt prices lower, creating more distressed muni bonds for the hedge funds to buy, he said.

Mintz, of the Stone Lion hedge fund, played down Fabian's scenario, although he said the funds would consider accepting a below-par repayment where warranted. "Just to gratuitously offer discounts probably wouldn't happen," he said.

EUROPEAN BANKS

Detroit may have another ingredient to attract distressed debt hedge funds: motivated sellers.

Hector Negroni, the co-chief executive of Fundamental Credit Opportunities, a fund that specializes in muni market investing, said a significant amount of Detroit's roughly $1.5 billion in pension certificates is held by foreign banks.

Some advisers anticipate those banks would prefer to sell their large holdings rather than slug it out in politically charged restructuring talks overseas.

A similar situation has played out in the Jefferson County bankruptcy. A unit of Britain's Lloyds Banking Group and French bank Societe Generale have been selling warrants to the hedge funds, according to court records.

But advisers and lawyers in the municipal world warned that while there may seem to be significant opportunities in restructuring local governments, skills honed in corporate bankruptcy may not apply.

"I think it will be a period of time where the distressed investor community will come to an appreciation that these situations are so very, very different from a commercial bankruptcy," said Kopacz, the municipal adviser.

"Everyone points to the politics but it's even more fundamental than that. If you live in the north you have to take care of the snow and you have to have a police department and a fire department. You can't liquidate a city."

(Reporting by Tom Hals in Wilmington, Delaware; Editing by Eddie Evans and Mary Milliken)

BBC News - Australia's central bank cuts key interest rate to record low

Australia's central bank has cut its benchmark interest rate to a record low, in an attempt to counter slowing growth in the country's mining sector.

There have been fears that Australia's resource boom may be hurt by slowing global demand

The Reserve Bank of Australia (RBA) cut its key rate to 2.75% from 3%.

The bank said it expected investment in the resources sector, one of its biggest drivers of growth in recent times, to peak this year.

It added that a rate cut would provide a boost to other areas of the economy and help sustain long-term growth.

"There has been a strengthening in consumption and a modest firming in dwelling investment, and prospects are for some increase in business investment outside the resources sector over the next year," the central bank said in a statement.

"These developments, some of which have been assisted by the reductions in interest rates that began 18 months ago, will all be helpful in sustaining growth."

'More confidence'

Australia's economic growth in recent years has been fuelled by the growing demand for its commodities, such as iron ore.

That resulted in a resources boom in Australia and helped it sustain growth through the global financial crisis.

However, as demand from key markets such as China has eased, there have been concerns that Australia's mining sector may see its growth slow.

At the same time, many analysts have pointed out that other areas of the country's economy have not done so well, resulting in what many have termed a two-speed economy.

To make matters worse, the Australian currency has strengthened - making its exports more expensive, as well as affecting sectors such as manufacturing and tourism.

It rose nearly 9% against the US dollar between June 2012 and April 2013.

Amid all these concerns, there have been calls for policymakers to take steps to help boost growth, especially in the non-mining sectors, to ensure that the economy continues to grow.

Analysts said the cut in interest rates, which will help bring down borrowing costs for businesses and consumers, will help to provide some relief to those sectors and allay fears of an economic slowdown.

"Commodity prices have fallen and inflation has come in less than expected, and of course the Australian dollar through all of that has remained surprisingly strong," said Shane Oliver, chief economist with AMP Capital Investors.

"I think it was appropriate for the Reserve to provide a bit more confidence [so that] when the mining investment boom starts to wane the rest of the economy will fill the gap."

The Australian dollar weakened slightly, dipping 0.7% against the US dollar, after the rate cut was announced.

It was trading close to A$0.9808 against the US dollar in Asian trade.