The Australian dollar has closed lower after the Reserve Bank of Australia's (RBA's) decision to keep the official cash rate on hold at its November board meeting, at which governor Glenn Stevens' said the local currency was "uncomfortably high".
The Australian dollar lost ground directly after the RBA's decision to leave the cash rate at 2.5 per cent, slipping to 94.74 US cents at 1432 AEDT, down from 95.00 US cents at 1428 AEDT.
At the local close of 1700 AEDT, the local currency was still trading around 94.75 US cents, down from 94.88 cents at yesterday's local close.
IG Markets chief strategist Chris Weston said the fall was due to Mr Stevens' remarks on the exchange rate in the RBA board's statement.
Mr Stevens cited the currency's persistent strength as one reason behind the bank's decision to hold the cash rate for the third consecutive month.
"This is a more dovish change from the October 1 statement and very much in line with Glenn Stevens’ speech last week," Mr Weston said.
At a Citi conference last week Mr Stevens had downplayed recent property bubble fears and said he expected the Australian dollar to be "materially lower" in future.
"Still, do we really think the RBA is going to do anything about the strength in the AUD?" said Mr Weston.
"For me at the very most it will curb them from raising rates, but they are not going to cut rates given the current fundamentals at play.
"The RBA will be on hold for many months to come it seems and they will (more than ever) be hoping the US Federal Reserve comes to the party to taper its bond purchases sooner rather than later, although we could say the same about the Bank of Japan and the European Central Bank as well."
