The Australian dollar rebounded from six-week lows on Thursday as extreme risk aversion waned, but evidence a major slowdown is underway across Asia and concerns about the global banking sector capped gains. Analysts said dire economic data from China, Japan and South Korea boded ill for Australia, which sells about half of its exports to Asia.
"The speed at which Asian exports have collapsed is just staggering. That would have an impact on monetary policies in Asia," said Robert Rennie, chief currency strategist at Westpac Banking Corp. "It's hard to see the Aussie doing well in such an environment," he said.
The Aussie clawed back from an intra-day low of $0.6523 to trade at $0.6577 late in the local session, slightly stronger than $0.6523 seen here on Wednesday. Still, that's well below the week's high of $0.6842, and over 9 percent below a three-month high of $0.7266 struck on January 6 and 7. The Aussie also recovered to 58.67 yen from an intra-day low of 57.89, and compared to 58.61 seen on Wednesday.
In a sign of the deepening world recession, Japan's exports plunged a record 35 percent in December, while South Korea's economy suffered its second-biggest contraction on record in the final quarter of 2008, pushing it closer to its first recession since the Asian financial crisis.