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Market Update

Reserve Bank of Australia Holds Out for Lower Aussie Dollar

Author: Marcus Jacob
Last Update: 9:44 AM ET December 12 2014

5:30 PM Sydney – In volatile trading Australian market indexes plunged deep in red several times but at close managed to pare gains. Crude oil, iron ore, gold closed down at multi-year lows. Australian dollar declined to a 54-month low after RBA governor Glenn Stevens talked down the currency.

Australian market indexes turned sharply lower two times but at close managed to pare most of the losses.

Australian dollar declined and market indexes extended losses in the week to 2.1% after crude oil and iron ore price dropped to multi-year lows.

Australian dollar dropped to a 4-½ year low after Reserve Bank of Australia governor Glenn Stevens talked down currency in a wide ranging interview with Fairfax Media.

Governor Stevens estimated fair value of the dollar on a trade-weighted basis near 75 U.S. cents compared its current trading range near 83 cents.

“It is quite likely that the Australian dollar will a year from be lower than it is today, on the basis of facts that we presently have,” RBA governor added.

Australian dollar closed at 82.77 U.S. cents and in stock-trading turnover slumped to 738 million shares worth $4.2 billion.

ASX 200 Index fell 11.40 or 0.2% to 5,219.60 and broader All Ordinaries Index slid 10.50 to 5,196.90.

For the week, ASX 200 dropped 2.1%.

In commodities trading, gold dropped US$7 to US$1,220 an ounce and light crude oil slipped 97 cents to US$60.19 a barrel.

Australian Stock Movers

BHP Billiton Limited dropped 1.9% to $28.46 and the diversified natural resources company shipped its one billionth ton of iron ore to China.

Chief executive officer Andrew Mackenzie said “It took nearly 30 years for BHP Billiton to ship 100 million tons of iron ore to China and then only 12 more years to reach the one billion ton milestone.”

Boart Longyear Ltd declined 5.4% to 17.5 cents after the U.S.-based drilling service provider lifted revenue forecast for the year in the range of $819 million and $852 million but lowered earnings before interest and tax, depreciation and amortisation of about $30 million.

iCar Asia Ltd surged 6.7% to 96 cents after the Malaysia-based online automotive website operator today announced the completion of the acquisition of Thailand-based automotive website, One2car.com for about $16.7 million.

Leighton Holdings Limited decreased 0.6% to $21.56 after the engineering construction company agreed to sell John Holland, contracting business to China-based China Communications Construction Company International Holding Ltd. for about $1.15 billion or $950.4 million.

Sources: Data collected by 123jump.com and Ticker.com from company press releases, filings and corporate websites. Market data: BATS Exchange. Inc