The Australian dollar twice dipped to new six year lows below 70 US cents on Wednesday, rocked by weaker than expected economic growth and a slowdown in Chinese manufacturing.
The local currency dropped to 69.89 US cents at 1130 AEST as official data showed economic growth of 0.2 per cent in the June quarter and 2.0 per cent in the year to June.
Economists had expected a quarterly growth rate of 0.5 per cent and an annual rate of 2.2 per cent.
The Australian dollar had earlier broken below 70 US cents for the first time since April 2009 because of disappointing Chinese manufacturing data.
Easy Forex currency dealer Andreas Tjahja said the Chinese data offered more evidence that its industrial machine is stalling, rattling global equities.
“A lot of it is risk aversion, equity markets are shaky at the moment,” he said.
US, Asian and European stocks tumbled overnight after China’s index of manufacturing activity came in at 49.7 in August, its lowest in three years.
The Australian share market fell more than two per cent on Tuesday after the data was released, and was more than one per cent lower in early trade on Wednesday.
It did, however, pick up to close flat.
The Aussie dollar has already tumbled about 20 per cent in the past year on the back of soft demand for commodities and slower growth in China.
At 1637 AEST, the Aussie dollar was worth 70.3 US cents.
Growth figure in line with budget expectations: Hockey
Treasurer Joe Hockey defended the growth figure, saying it was in line with budget expectations.
“Today’s national accounts show the Australian economy is growing well despite the biggest fall in our terms of trade in more than 50 years,” he said.
“At a time when other commodity-based economies like Canada and Brazil are in recession, the Australian economy is continuing to grow at a rate that meets and sometimes beat our most recent budget forecasts.”
Mr Hockey blamed one-off factors such as weather-related interruptions to mineral exports for the softer-than-expected figures.
He said there was evidence the transition away from a reliance on mining investment was well underway.
“Looking forward, we are already two months into the first quarter of a new financial year, and the Government’s May budget is already adding momentum to the Australian economy.
“Business conditions outside the mining sector have risen to their highest level in almost five years.”
– with ABC