Units of CDL Hospitality Trust (CDLHT) (SGX:J85) closed the trading day 2.5% lower on 3 February following news that the Reserve Bank of Australia has decided to cut interest rates.
The surprise rate cut, which was reduced by 25 basis points to 2.25%, sent the Australian dollar to an almost 6-year low of USD0.7635 while the New Zealand dollar fell 1.5% to USD0.7185, its lowest since early 2011.
CDLHT has a portfolio of five properties in Australia and one property in New Zealand. These properties represent 15% of CDLHT’s portfolio value.
CDLHT had earlier indicated in its FY2014 results presentation that performance of its Australian properties were flat for the year due to a lacklustre economy and low commodity prices.
Observers say that there is still room for the Australian dollar to depreciate further. A slowing demand for commodities in China, falling prices of raw materials such as iron ore, and the interest rate cut could put further downward pressure on currencies downunder over the next four quarters.
Units of CDLHT has since fallen by more than 3% from its high of SGD1.81 at the start of the week. Units of CDLHT are currently listed on the Singapore Exchange at SGD1.75.