Aug. 2 (Bloomberg) -- The Australian dollar fell against the greenback and yen after the Reserve Bank kept its cash rate unchanged, citing global uncertainty. The so-called Aussie declined against all of its 16 major counterparts after central bank Governor Glenn Stevens said the pace of global growth is slowing and "it is appropriate under such circumstances for monetary policy to exert a degree of restraint." Australian 10-year yields fell below the overnight cash rate for the first time in 2 1/2 years. New Zealand's dollar advanced to its highest level in a year against its Australian counterpart. "Clearly it's bearish for the Aussie dollar," said Adam Carr, a senior economist in Sydney at ICAP Australia Ltd., a unit of the world's biggest interdealer broker. "They're citing concerns over global growth. These concerns aren't going away. I think it's quite reasonable that we don't get another rate hike until well into 2012." Australia's dollar dropped to $1.0908 as of 4:31 p.m. in Sydney from $1.0971 in New York yesterday, after earlier climbing to $1.1008. It slid to 84.37 yen from 84.71 yen yesterday. New Zealand's currency was at 87.67 U.S. cents from 87.65 cents yesterday, when it touched 88.44 U.S. cents, the most since it was freely floated in 1985. It advanced to 67.81 yen from 67.67 yen yesterday, when it climbed to 68.89 yen, the highest level since May 2010. The so-called kiwi reached NZ$1.2435 per Australian dollar, its strongest since August 2010, from NZ$1.2515 yesterday, before trading at NZ$1.2445. Rates Unchanged Stevens held the overnight cash rate target at 4.75 percent for a record eighth-straight meeting, as forecast by 21 of 25 economists surveyed by Bloomberg News. In its statement, the central bank said "the board remains concerned about the medium-term outlook for inflation." It cited "the acute sense of uncertainty" in financial markets as a key factor for inaction. Yields on Australia's 10-year debt lost as much as 18 basis points to 4.72 percent, the first time they fell below the RBA's cash rate since February 2009. The country's two-year yield dropped 21 basis points to 4.29 percent. Traders now see a 4 percent chance the central bank will cut its key rate by 25 basis points at its next meeting in September, a Credit Suisse AG index showed today. That compares with a 15 percent chance for an increase projected yesterday. Risk of Recession "Financial conditions are tight enough for us to think there is a 30 percent risk of domestic recession" in Australia in 2012 if employment growth stalls amid a widening of the gap between the mining industry and the rest of the economy, according to a Morgan Stanley report today. Australian home-building approvals dropped 3.5 percent in June from a month earlier, the Bureau of Statistics said today. The median forecast was for a 3 percent gain in a Bloomberg News survey of 21 economists. House prices fell 0.1 percent in the three months through June, the Sydney-based bureau said. Australia's currency lost 0.7 percent today, the worst performer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Currency Indexes.

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