Aussie dollar crashes to new all-time low

The Australian dollar has crashed to new all-time lows in New York today, dropping more than half a cent in early trading to reach 54.46 US cents.

The dollar rebounded slightly in the subsequent hour to be trading at 54.59, but the forecasts remain pessimistic.

Meanwhile, former Reserve Bank governor Bernie Fraser says the volatility of currency markets has to be accepted.

Mr Fraser says he believes the Australian dollar is clearly undervalued.

With the local currency recording successive all-time lows, Bernie Fraser has told Radio National's "The Business Report" that market movements tend to be exagerated.

"This is a pretty clear overshoot, or undershoot of the market, so far as the Aussie dollar's concerned. But this is the way markets work," he said.

"They overshoot in both directions. We have to accept that, I think, in large degree."

Mr Fraser says he believes there will be second round inflationary effects from the GST, which could be exacerbated by the plight of the dollar.

"The Aussie dollar and oil prices, assuming they remain at current levels, would be potentially significant sources of inflation."

http://www.abc.net.au/news/newslink/nat/newsnat-16sep2000-8.htm

-- Carl Jenkins (Somewherepress@aol.com), September 16, 2000