The Aussie dollar has plunged below US $0.62 amid the constellation of geopolitical tension in the APAC region, US CPI, and increasingly hawkish US Federal Reserve.
The AUDUSD exchange rate fell to US $0.6169 before paring some of the losses to hover around US $0.6188.
Lower AUD and hawkish Fed are expected to force the Reserve Bank of Australia to lift interest rates more than it wants to due to further inflation pressure from the rising price of imported items.
Australian Treasurer Jim Chalmers this week warned the Reserve Bank of Australia not to fall behind in the interest rate race.
In an unexpected move, the RBA broke with other central banks around the world by slowing the pace of rate hikes – lifting the cash rate by 0.25 percentage point, half of what markets had expected in terms of the serious efforts to curb red-hot inflation and cool off inflation expectations.
The dovish attitude and inadequate action sent the Australian dollar (AUD) to new record lows over the past two weeks.
