CNBC: Soros Rumor Kills Australian Dollar's Rally

Tuesday, 07 May 2013 10:40 AM

By Glenn J. Kalinoski

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Australia's dollar took a hit following a report that George Soros may be shorting the currency.

CNBC said the currency, also known as the "Aussie," lost 0.6 percent Monday after the Sydney Morning Herald reported bets amounting to $1 billion were placed via Singapore and Hong Kong, "believed to be by Soros Fund Management."

CNBC stated that it has not been able to independently confirm the rumor.

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"This can influence people's thinking, particularly private traders. Soros is a successful trader and when someone like him takes a view, many people re-examine their own views," said Ric Spooner, chief market analyst at CMC Markets Asia Pacific.

David Greene, senior corporate foreign-exchange dealer at Western Union Business Solutions in Sydney, said the rumored move by Soros, who shorted the British pound in 1992, could affect traders' long-term view of the currency.

"[Soros] is obviously very influential on currency markets. If markets get a whiff that he is intervening, people start paying attention," Greene said.

Paul Gambles, managing partner at advisory firm MBMG International, told CNBC last week that shorting the Aussie is the "trade of the century." He sees little reason for further upside.

"[The] moderate growth outlook for the Australian economy and risks to Chinese growth" are key factors that could pressure the Aussie in the near term, Spooner said. "It has limited upside, particularly against the U.S. dollar. We see it moving back to 98 cents to the dollar over the course of the next few months."

Australia's currency has remained above parity against the U.S. dollar for most of the last two years. It has nearly doubled in value against the greenback since the low of $0.65 in October 2008.

The selling momentum continued Tuesday after the Reserve Bank of Australia reduced interest rates 0.25 percent to a record low 2.75 percent.

The Aussie declined 0.8 percent to $1.0171 after reaching $1.0165, the weakest level since March 4, according to Bloomberg News.

Soros placed a $10 billion bet against the U.K. pound in 1992 and became known as "the man who broke the Bank of England," CNBC reported.

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