The Australian dollar dropped after Moody’s Investor Services cut the credit rating of China.
A short while ago, the currency was trading 0.4% weaker at a session low of $US 0.7450.
China is Australia’s largest trading partner and the dollar’s fortunes are closely aligned to the world’s second largest economy.
“Moody’s downgrades China’s rating – Looks like AUD/USD sliding in response,” Sean Callow, a senior currency strategist at Westpac said. “Still the China proxy.”
Moody’s Investors Services downgraded China’s long-term local and foreign currency issuer ratings on concerns the country’s financial strength would erode in the coming years, while debt rises.
The rating was dropped by a notch from Aa3 to A1, which is still comfortably in the investment grade, Moody’s said.