Ella 
The Australian dollar plunged to its lowest level this year on June 12, 2025, sparking speculation that authorities may intervene to stabilize the currency. The AUD/USD pair briefly touched 0.6740 during Asian trading hours—a level not seen since November 2024—before recovering modestly to 0.6765. The sharp decline has raised alarms among policymakers, with some analysts suggesting that the RBA and Treasury could step in if the slide accelerates further.
The currency’s weakness stems from a confluence of factors, including deteriorating risk sentiment, geopolitical tensions, and mounting concerns over Australia’s economic resilience. Overnight, global markets were rattled by escalating Middle East tensions following an Israeli airstrike in Lebanon, which prompted a flight to safety. The volatility index (VIX) surged 12%, and investors flocked to traditional safe-haven assets like the US dollar and gold, leaving commodity-linked currencies like the AUD vulnerable.
Domestically, the Australian government’s latest budget revisions have also contributed to the AUD’s struggles. Treasurer Jim Chalmers announced a significant increase in social spending to address cost-of-living pressures, funded in part by higher taxes on mining profits and foreign investors. While politically popular, the measures have drawn criticism from business groups, who argue that they could deter investment and weigh on long-term growth. Markets reacted negatively to the news, with the AUD shedding nearly 1% in the hours following the announcement.
Another critical factor weighing on the currency is the growing divergence between Australia’s economic performance and that of its peers. While other advanced economies, particularly the US, have shown signs of reaccelerating, Australia’s GDP growth has stagnated. First-quarter GDP data, released last week, showed the economy expanded by just 0.2% quarter-on-quarter, well below expectations. Weak consumer spending and declining business investment were cited as key drags, reinforcing concerns that Australia may be entering a prolonged period of subpar growth.
In response to the AUD’s slide, senior RBA officials have begun dropping subtle hints about potential intervention. Deputy Governor Andrew Hauser remarked in a speech that “disorderly currency movements could pose risks to economic stability,” a comment interpreted by markets as a warning shot. While outright currency intervention remains rare for Australia, history shows that the RBA has stepped in during extreme conditions, such as during the 2008 financial crisis and the early 2020 pandemic sell-off.
The AUD’s depreciation has had immediate consequences for importers and households. Petrol prices, which are closely tied to the USD exchange rate, have surged to record highs, adding to inflationary pressures. Conversely, exporters—particularly in the agricultural sector—have welcomed the weaker currency, as it makes Australian goods more competitive abroad. Grain exporters reported a spike in inquiries following the AUD’s drop, though some warn that prolonged volatility could disrupt hedging strategies.
Technical analysts are now closely watching key support levels. A sustained break below 0.6720 could open the door to a test of the 2024 low of 0.6650, according to strategists at ANZ. On the upside, resistance is seen near 0.6840, a level that has capped rallies multiple times in recent weeks.
As the day progressed, the AUD found some support from a modest rebound in equity markets, but the overall tone remained cautious. With no major domestic data releases scheduled for the remainder of the week, external factors are likely to dominate trading. Traders will be closely watching US inflation expectations and geopolitical developments for near-term direction. For now, the Australian dollar remains under pressure, with the threat of intervention looming larger by the day.
You Might Be Interested In:
