Since mid-April, the Australian dollar has plummeted around 11%. After such a dramatic fall, Robert Rennie, head currency strategist at Westpac (ASX: WBC), has called for a more "sober reading" of the Aussie dollar's prospects, stating that the speed at which it fell got a little excessive at times.
After hitting a 33-month low of US93.33c last week, the dollar has regained a portion of its strength and is now sitting at US94.88c, however, Rennie believes the dollar could reach as high as 98 US cents, and shouldn't fall below its recent levels – for now, at least.
On the other hand, whilst the dollar has fallen in recent weeks, it is still sitting at quite a high value, which could prompt the RBA to cut rates sooner rather than later. Should it approve further rate cuts, which National Australia Bank (ASX: NAB) has predicted it will, the dollar would likely fall lower, which the RBA believes could help rebalance growth in Australia.
Without action being taken by the RBA however, it looks as though the dollar's plunge could indeed by over for now.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned in this article.
