Dollar rebounds in afternoon

The local unit has approached US74 cents amid a choppy session.

Investors have bought back in following a sharp fall in the local unit.

The Australian dollar was higher in early afternoon, amid choppy session as aftershocks and waves of risk-off sentiment swept through markets following the Brexit vote.

At 1.45pm (AEST) on Tuesday, the local unit was trading at US73.99 cents, up from US73.33c on Monday.

It came as investors bought in following a sharp fall in the local unit, following the yuan’s devaluation and Britain’s ratings downgrade, which saw the dollar trading at US73.29c at 7am this morning.

OANDA Australia and Asia Pacific senior trader Stephen Innes said the decision of both Standard & Poor’s and Fitch to cut Britain’s credit ratings had hit the local currency.

“Until that point, the Aussie and Kiwi have been relatively insulated and outperformed G-3 currencies (the US dollar, yen and euro) on the back of higher yield,” he said in a note.

However, Mr Innes said commodity currencies like the Aussie could still find support amid the extremely bumpy market aftershocks.

“This haven makes some sense, after all the UK lost its status decades ago as a major consumption player in all things copper and iron ore,” he added.

“This means that we could see the negative impact on commodity prices from the Brexit tremors quickly fade.”