The Australian dollar fell below 90 U.S. cents on Friday morning after comments from Glenn Stevens, governor of Reserve Bank of Australia (RBA), the country's central bank, saying the local currency needs to be closer to 85 U.S. cents, local media reported.
The Australian dollar fell to a three-and-a-half month low at 89.14 U.S. cents in the early hours of Friday morning, following Stevens' comments published overnight in the Australian Financial Review (AFR).
"I thought 85 U.S. cents would be closer to the mark than 95 U. S. cents ... but really, I don't think we can be that precise," Stevens said in an interview with the AFR.
While the Australian dollar had already been falling against a stronger U.S. dollar, financial service firm BK Asset Management Managing Director Kathy Lien said Stevens' comments sent the local currency "crashing down."
"With limited capacity to lower interest rates, Stevens' comments basically amount to verbal intervention and he is hoping that tapering by the (U.S.) Fed will help drive the currency to his targeted rate," Lien said.
"If it fails to do so, the RBA may have to resort to another rate cut."
She said the RBA wanted to see the Australian dollar lower.
"As such, we not only expect the AUD/USD to break below its three-year low of 88.46 U.S. cents but we expect its slide to extend down to 85 cents," Lien said.