Australian dollar falls to twelve-year low<\/p>\n
SYDNEY (Agencies): The Australian dollar sank below 63 U.S.
\ncents yesterday to its lowest levels since the \"Banana Republic\"
\ndays of 1986, as violence in Indonesia and fresh bad news from
\nJapan deepened investors' disillusionment with Asia.<\/p>\n
The dollar breached this year's former low in early European
\ntrading and dealers were said to be using the Aussie as a \"proxy\"
\nto sell down other regional currencies.<\/p>\n
By 5.20 p.m. (0720 GMT), the currency had slumped to 62.94
\ncents, below this year's former low at 63.08 cents. Dealers said
\nnew support levels were 62.75 and 62.50 cents.<\/p>\n
\"With the Asian economic problems and these latest riots in
\nIndonesia, they're using the Australian dollar as a proxy to sell
\ndown some of the other Asian currencies, because these currencies
\ndon't have enough liquidity,\" Chase Manhattan corporate foreign
\nexchange dealer Andrew McGill said.<\/p>\n
\"It's much easier and safer to trade Aussie, Kiwi and yen than
\ntry and trade rupiah or these other currencies and get stuck with
\na position,\" he added.<\/p>\n
Although the Australian economy has so far proved fairly
\nresistant to the Asian contagion, Australian export earnings are
\nthreatened and the government has cut growth forecasts.<\/p>\n
Aussie dollar bears have been especially sensitive to problems
\nin Japan, Australia's single largest export market. Dealers cited
\nnews on Tuesday that Japanese wholesale prices fell 2.3 percent
\nin April.<\/p>\n
The currency has not been at these levels since May 1986, when
\nthen Treasurer Paul Keating warned that Australia risked becoming
\na \"banana republic\".<\/p>\n
Then, the dollar reached a record low of 57 U.S. cents in July
\n1986, before swaying back to 63 cents in September.<\/p>\n
The Reserve Bank of Australia intervened to support the
\ncurrency in January this year when it slumped to 63.16 cents, but
\nmost dealers did not expect further intervention unless 60 cents
\nwas threatened.<\/p>\n
In Tokyo, the U.S. dollar strengthened against the yen in
\nTokyo yesterday, rising at one point to its highest level in more
\nthan a month. Tokyo stocks rose slightly.<\/p>\n
The dollar was quoted at 134.12 yen at 5 p.m. (0800 GMT), up
\n0.99 yen from late Tuesday in Tokyo and above its late New York
\nlevel of 134.07 yen.<\/p>\n
The dollar reached 134.25 yen earlier in the day, its highest
\nsince April 7, when it reached 134.72 yen.<\/p>\n
Violent riots in Indonesia led investors to dump Asian
\ncurrencies in favor of the U.S. dollar, which is seen as a safe
\nhaven in times of unrest.<\/p>\n
The dollar ranged from 133.75 yen to 134.25 yen during Tokyo
\ntrading.<\/p>",
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