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May 15th, 2013 
Peter Nolan
THE Australia dollar has fallen below 99 US cents, driven lower by growing investor demand for the US dollar and a negative response to Tuesday’s federal budget.
At 1700 AEST, the Australian dollar was trading at 98.72 US cents, down from 99.79 US cents on Tuesday.
ForexCT head of research Steven Dooley said the local currency had lost around one US cent in the past 24 hours after Treasurer Wayne Swan announced a larger than expected budget deficit.
Mr Swan forecast a budget deficit of $18 billion for the next financial year followed by a deficit of $10.9 billion in 2014/15.
Mr Dooley said the move lower was also linked to a rally in the US dollar against all major currencies.
“The US dollar moved higher across the board, so it doesn’t necessarily look like (the move lower in the Australian dollar) was a major vote of no confidence in the budget,” he said.
Mr Dooley said he expected the Australian dollar to continue to fall over the next few days before finding support around the 98 US cent level.
He said a sharp move lower in the currency was unlikely, despite some experts tipping a move to around 80 US cents.
The fundamental reasons for the currency’s strength, including high demand for Australian AAA-rated Treasury bonds and high interest rates, relative to the rest of the developed world, would ensure it remained attractive to investors, he said.
“Over the last couple of years the Aussie has gone through some periods of heavy selling and has always managed to bounce back.”
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