AUD is weak

By Candice Zachariahs
Nov. 7 (Bloomberg) -- Investors should sell Australia's
currency against the U.S. dollar because it may lose 29 percent
as it slumps toward a record amid a global recession, Morgan
Stanley said.
The Australian dollar, which dropped 27 percent in the past
three months, may decline toward its April 2001 low of 47.75 U.S.
cents as investors dump the nation's higher-yielding assets and
retreat to the safety of the greenback, according to Ned
Rumpeltin, a London-based currency strategist at Morgan Stanley.
``The most immediate concerns about the financial system may
have eased, but worries about global growth prospects are now
coming to the fore,'' Rumpeltin wrote in a research note
yesterday. ``There is considerable scope for further declines.''
Australia's currency dropped the most in a week, falling 2.5
percent to 66.20 U.S. cents as of 12:07 p.m. in Sydney from 67.86
cents late in Asia yesterday. It reached an all-time high of
98.49 cents on July 16.
Morgan Stanley lowered its forecast for the Australian
dollar last month, predicting it would fall to 57 cents by year's
end and then touch 47 cents by June 2009, the lowest since the
currency was first freely traded in December 1983.
The Aussie, as the currency is called, has tumbled since the
collapse of Lehman Brothers Holdings Inc. in September paralyzed
credit markets and caused equities to tumble as concern over a
global recession spread.
The International Monetary Fund yesterday predicted that
global growth will slow to 2.2 percent next year amid the first
simultaneous recession in the U.S., Japan and euro region in the
post-World War II era. A growth rate of 3 percent or less is
``equivalent to a global recession,'' the IMF said as recently as
April.
The Australian economy will grow 1.8 percent in fiscal 2009,
according to the IMF, as a A$10.4 billion ($6.85 billion)
stimulus package from the government and aggressive interest rate
cuts by the central bank boost the domestic economy.