THE dollar ended higher for the first time in a week yesterday as central bank support and a rebound on Asian equity markets lifted the currency. This was after the local currency hit a 5 1/2-year low in morning trade. At market close, the Australian dollar was trading at US61.65c, up from yesterday's close of US61.23c. The Aussie moved between a late afternoon high of US61.84c and the morning low of US60.14c -- the first time since April 2003 it had dropped to that level. It rallied to US61.45c in the afternoon after spending most of the day just above US60c, the lowest level in more than five years. ANZ currency strategist Tony Morriss said sentiment for the dollar improved as the Reserve Bank intervened in foreign exchange markets and as Asian equity markets rebounded. In morning trade, the RBA bought more Australian dollars to provide liquidity in the foreign exchange market, an RBA spokesman said. This followed the central bank intervening in forex markets during Friday night's offshore session and in yesterday's local trade. Mr Morriss said the RBA's action helped to reinforce support at about US60c for the Australian dollar. "The result has provided sufficient liquidity to the Aussie," Mr Morriss said. A lift on Asian bourses also helped to support the dollar, he added. Mr Morriss said the market dynamics might have changed, which helped to boost the dollar yesterday. "There may be confidence that the speed of the Aussie's decline is at least coming towards an end, at least for the time being," he said. "If stock markets do rebound, that is a necessary condition for the Aussie dollar to post more impressive gains." Last night was the start of the US Federal Open Markets Committee (FOMC) two-day meeting on interest rates. Markets are expecting the US Federal Reserve's policy-making arm to announce a cut in its key federal funds rate by 50 basis points to 1 per cent early tomorrow morning Australian time. Mr Morriss said that if the positive moves on Asian sharemarkets flowed through to Europe and the US overnight last night, the dollar could push above US62c today. "It may reflect some better optimism that maybe we are starting to see the worse of the selldown in markets," he said. At market close, the Reserve Bank of Australia's trade weighted index was at 51, down from Monday's close of 51.3. It was the index's lowest close since October 2, 2002, when it closed at 50.9 index points.

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