“There’s room to cut should that be necessary,” RBA Assistant Governor Christopher Kent said yesterday at the Bloomberg Summit.
Year-end forecasts for the Aussie range from Saxo Bank A/S’s 88 cents to $1.12 at Royal Bank of Canada, according to data compiled by Bloomberg.
“We’re hedged and we’ll stay that way until we see fundamentals change in a bigger way,” said Daniel Janis, a global fixed-income portfolio manager who helps oversee about $15.5 billion at Manulife Asset Management in Boston. “We like the quality of the government bonds because we don’t have to worry from a ratings standpoint, so it’s a quality place holder in our portfolio.”
Janis estimates the Aussie will trade in a range from parity to $1.06.
Offshore investors’ holdings of Australian sovereign debt swelled by A$23 billion to A$207 billion last year and foreign deposits in domestic banks rose to a record, official data show.
“The main theme is that China’s still got this diversification bid out there for the Australian dollar and that has limited declines in the currency above the parity level,” said Adrian Foster, the Hong Kong-based head of financial- markets research for Asia at Rabobank.
Rabobank, the most accurate firm at picking the Aussie over the past four quarters according to data compiled by Bloomberg, forecasts it will end the year at $1.06.