THE Australian dollar closed higher today, despite traders interpreting the minutes of the Reserve Bank of Australia's (RBA) December board meeting to mean interest rates could remain on hold in February.
At 5pm (AEDT), the Australian dollar was trading at 91.26 US cents, up a touch from yesterday's close of 91.09 cents.
During the local session, the local unit traded between 91.73 US cents and 91.21 cents.
The RBA's decision to lift the cash rate to 3.75 per cent in December had been been ``finely balanced'', the minutes of the board's December 1 meeting showed.
The minutes showed RBA board members had very carefully weighed up developments in the domestic and international economy and the potential blow to business confidence from a rate rise.
Colonial First State head of investments markets research Stephen Halmarick said the December minutes had left investors wondering if there was potential for a pause in the RBA's rate hiking cycle when its board next meets on February 2.
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"There was a bit of a feeling the minutes left a rate hike for February as an open question,'' Mr Halmarick said.
"The bank has clearly given itself some flexibility on the back of that.
"But there's a lot of economic data due before then.''
The minutes showed the RBA board believed that rates were ``too low for an economy that had resumed expanding'' in 2009.
Following the December board meeting, the RBA lifted the cash rate by 25 basis points to 3.75 per cent, its third rate hike in as many months.
It was the RBA's third monthly rate rise in a row.
Higher interest rates make the Australian currency more attractive to investors and has been one of the factors pushing the Australian dollar higher throughout 2009.
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