By GREG ANSLEY
Australia's political leaders moved to shore up collapsing confidence in the economy yesterday as the dollar plunged below 50USc for the first time and unemployment climbed back to 1999 levels.
The ranks of the unemployed were swollen by 26,400 job seekers in February. The dollar crashed to 49.99USc on Wednesday night and slipped further to a record low of 49.23USc by lunchtime yesterday.
At close of trading yesterday, the dollar had crept up to 49.49USc.
Prime Minister John Howard rejected talk of recession as unjustified and said there was nothing magical about the 50USc level in economic terms.
"What is happening at the moment is that financial markets around the world are in some turmoil and the American dollar in those circumstances is seen as a safe haven," Mr Howard said.
"Everybody flocks to the greenback, and that affects the level of everybody else's currency."
Treasurer Peter Costello said the fundamentals of the economy remained strong.
"The important things are where your interest rates are, where your inflation is, where your employment is going, where your current account is going, so that in your real economy - the thing that actually affects people's lives - you can make sure that you're making the right calls," he said.
But the opposition Labor Party's shadow treasurer, Simon Crean, said the dollar's dive was a huge wake-up call that the Government had ignored.
He said Mr Howard was still in denial, refusing to accept that the rest of the world saw Australia as an old economy.
"They see that if we're disinvesting in the very things that drive economic growth - things like innovation, skills, education and research and development - why should they invest in us," Mr Crean said.
The rise in Australia's seasonally adjusted unemployment rate by 0.3 points to 6.9 per cent added to a deepening gloom.
Opposition Leader Kim Beazley said he was now less optimistic about Australia's chances of avoiding recession.
But Mr Costello said the unemployment rate had increased because more people had entered the labour market. The fact that more people were looking for work was what drove the rate higher, not that there were less jobs, he said.
During February, fulltime employment rose by 33,500, offset by the loss of 31,000 part-time jobs, to give net seasonally adjusted employment growth of only 2500.
The participation rate edged up by 0.1 points to 63.7 per cent, with 26,400 more people looking for fulltime work and an extra 5200 seeking part-time jobs.
Youth unemployment rose from 23 per cent in January to 26.9 per cent.
Australian leaders talk up plunging dollar
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