SYDNEY (REUTERS) - The Australian dollar dropped around half a US cent on Tuesday (Aug 2) after the Reserve Bank of Australia (RBA) cut its interest rate to a record low 1.5 per cent at its monthly policy meeting.
It was a widely expected decision after a recent run of soft inflation readings. The 25 basis points means the RBA has slashed rates by 300 basis points since November 2011 to support the economy as it transitions towards non-resources growth after an unprecedented mining investment boom.
"The board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting," bank governor Glenn Stevens said in a statement.
The Aussie fell as low as 74.86 US cents, from 75.40 before the RBA move, and was at 75.15 at 0440 GMT. The Aussie has gained 3 per cent so far this year.
The Aussie also slid against the Singapore dollar after the rate decision and was trading 0.57 per cent lower at 1.0097 as at 1 pm Singapre time from its close of 1.0155 on Monday.