THE Australian dollar fell sharply today after China announced a tightening of controls on high-yielding financial products that form a key part of the country's shadow-banking system. Traders said the announcement highlighted risks that might be posed to China's financial system, with the country's state-run banks in recent days reporting huge exposures to the wealth management products in question. China is Australia's biggest trading partner, and the Australian dollar is often traded by global investment firms as a more liquid proxy to the yuan. At 0530 GMT, the Aussie was buying US$1.0427 compared with US$1.0467 late in Sydney trading Wednesday. It traded as high as US$1.0458 in early Asian trading. The fall in the Australian dollar mirrored falls in Asian share prices, with Chinese shares experiencing their biggest one-day fall in nearly a month. Earlier, a raft of local economic reports served to remind traders that parts of the economy remain weak, and the Reserve Bank of Australia may yet need to cut interest rates again. Australian government data showed job vacancies fell a seasonally-adjusted 10.1% over the three months to February from the previous three months. The total number of vacancies fell to 149,800 in the three-month period, the lowest level since February 2006. The policy-making board of the RBA meets next Tuesday and is expected to keep its cash rate target steady at 3.0%. "The weakness in the job vacancies and job ads measures suggest that employment growth is likely to be soft in the near term," said Justin Fabo, economist at ANZ. Inflation also remained muted in March, according to a survey by TD-Securities and the Melbourne Institute. The TD-MI inflation gauge rose 0.2% over the month and by 2.1% from a year earlier.

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