Dollar up after RBA keeps rates steady

THE Australian dollar has climbed closer to 103 US cents after the central bank suggested interest rates could remain unchanged for the remainder of the year.

THE Australian dollar has climbed closer to 103 US cents after the central bank suggested interest rates could remain unchanged for the remainder of the year.

At 1700 AEST on Tuesday, the local currency was trading at 102.78 US cents, up from 102.58 cents on Monday.

The Australian dollar opened the trading week below 103 US cents, following the release of weak manufacturing data from China over the weekend.

OZForex senior foreign exchange manager Jim Vrondas said on Tuesday that the Aussie dollar remained subdued for much of the day, before rising following the Reserve Bank of Australia's decision to keep its cash rate
on hold at 3.5 per cent.

"The market appears to have taken its lead from the accompanying statement, which inferred that rates will remain as they are for the foreseeable future."

Mr Vrondas said that despite a spate of weaker data suggesting another rate cut from the RBA in 2012 was possible, the central bank's accompanying statement on Tuesday gave no suggestion any further rate cut - causing a relief rally on the Australian dollar.

Mr Vrondas said the local currency was likely to end the week above 103 US cents following significant data readings including national accounts on Wednesday and labour force data on Thursday.