The Australian dollar was on the defensive near three-week lows on Monday after troubles at another domestic bank encouraged investors to price in a greater chance of lower interest rates in the coming months. "The Aussie is struggling and it's partly to do with the concerns about our banking sector," said Stephen Roberts, chief economist at Lehman Brothers.
Australian banks had largely avoided the fallout from the global credit crisis but the latest disclosures have led risk adverse investors to pare their exposure to the high-yielding Aussie. The Aussie was at $0.9547/50 against the US dollar, down from $0.9584/89 on Friday, having fallen to a near three-week low of $0.9527 earlier in the session.