The Australian dollar fell versus the US dollar after the Reserve Bank of Australia stayed dovish.
On Tuesday, September 7, the Australian regulator confirmed its decision to go ahead with tapering its bond purchases as planned. The RBA also kept its benchmark interest rate at 0.1%. Australia's central bank expects a rapid economic recovery after the COVID-19 pandemic.
Experts note the RBA's dovish monetary policy stance. Tapering is expected to extend until February 2022, which is likely to lead to a weaker aussie in the long term.
On Tuesday, ahead of the RBA board meeting, the Australian dollar was trading sideways. Later, AUD gained 0.2% to 0.7456. On Wednesday, AUD/USD was trading around 0.7377, making attempts to increase. A correction in AUD/USD stopped at the support level of 0.7425. Later, the quote was about to consolidate amid low volatility in the market.
Some investors were surprised at the regulator's decision to slow the pace of bond purchases to A$4 million. Many experts believe that this decision does not go well with the extension of incentive programs until mid-February 2022. According to Philip Lowe, the RBA's chair, the central bank made such a decision amid uncertainty about the time and pace of the expected economic recovery.
All this has a profound impact on the aussie. Anyway, the Australian dollar is expecte to recover soon.
