The Australian dollar tumbled in today’s trade as OPEC decided to leave output unchanged which had a drastic effect on commodity currencies. At 608pm (AEDT) The Australian currency is trading at $84.91 US cents down from US85.42 cents at yesterdays close.
The oil cartel decided to keep output at 30 million barrels per day, at least 1 million above OPEC's own estimates of demand for its oil next year, sending the oil price plummeting towards the $70 a barrel mark.
The battle is now on between OPEC and non-OPEC countries, as a boom in U.S. shale oil production and a slowdown in China and Europe have already seen crude prices fall by nearly third since June.
"It is a new world for OPEC because they simply cannot manage the market anymore. It is now the market’s turn to dictate prices and they will certainly go lower," said Dr. Gary Ross, chief executive of PIRA Energy Group.
Although the Australian economy is not closely connected with oil, the sharp fall in price boosted the US dollar against a basket of other currencies including the Aussie and we could see more downward pressure on the currency as the oil price falls further.
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