The Sydney Morning Herald: ‘Risk-free’ asset takes a hit as US downgrade dents confidence

Currency strategist at foreign exchange provider Corpay Peter Dragicevich said the downgrade had probably compounded pressure on the Aussie dollar after Tuesday’s Reserve Bank decision to keep the cash rate on hold.

But he said the move would not change investors’ attitudes to holding US government bonds, as mandates that required some investors to hold AAA assets were loosened after S&P’s downgrade in 2011.

”It’s still the reserve currency; it’s still the most liquid and deepest bond market there is – that’s not going to change,” Dragicevich said.

Read the article in The Sydney Morning Herald here: https://www.smh.com.au/business/markets/risk-free-asset-takes-a-hit-as-us-downgrade-dents-confidence-20230802-p5dtb6.html