SYDNEY - The Australian dollar fell the most in a month after a plunge in the price of the country's aluminium and copper exports.
The decline in the currency followed the largest drop in aluminium prices in more than 16 years and the biggest slump in copper prices in almost three months.
Changes in metals prices typically affect the dollar because most of the country's exports are raw materials.
"This reversal in metals prices will weigh on the Australian dollar," said Alex Schuman, manager of currency strategy at the Commonwealth Bank of Australia in Sydney.
The currency fell more than 1USc to 76.46USc at 5pm in Sydney, the biggest slide since December 8.
Schuman forecast the dollar will fall to 75USc in the next few weeks before resuming its climb to 80USc by the end of the first quarter.
Australia's currency fell for a third day on concern that the nation's economy may slow. Commodities account for more than two-thirds of exports, which in turn make up a fifth of the economy.
Copper futures for March delivery fell 13.05USc to US$1.34 a pound on the Comex division of the New York Mercantile Exchange, the biggest percentage drop since October 13.
Aluminium for delivery in three months fell US$155, or 7.9 per cent, to US$1803 a tonne on the London Metal Exchange, the biggest decline since June 1988.
Strategists including John Rothfield at Bank of America Corp said Australia's dollar will rise once metal prices rebound, as they did after a 12.2 per cent slump in copper on October 13.
"We won't continue to get liquidation of base metal prices and this will prove to be a buying opportunity for metals and commodity currencies."
The local currency will buy 82USc by the end of the first quarter, he forecast.
- BLOOMBERG
Aussie dollar takes a plunge
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