Central bank of Australia sees scope to cut interest rates.

On Thursday Australia's top central banker stated that he saw possibility to cut interest rates more to make sure a long-lasting economic influence and warned about declining business investment and consumer spending.

Thursday’s Government data sought to strike a chord to the investors about downside risks to the economy with exports falling 11% in April from March. Australian dollar fell down to $0.8014 from around $0.8040 beforehand.

As a result of a droop in exports, Australia suffered its first trade deficit since July last year, just a day after 1st quarter GDP showed the country moved away a recession, helped by its best trade performance in 48 years.

Reserve Bank of Australia Governor Glenn Stevens said that it is likely that activity has remained subdued in the June quarter, the quick downfall in business investment is more or less undoubtedly continuing. While consumer expenditure has held up quite well so far, it may be weaker over the next few months, as the one-off government payments pass and rising unemployment starts to weigh.

Stevens also said that the joint effect of the large fiscal and monetary incentive has played a role in mitigating Australia from the worst global downturn in decades and that monetary policy intended to cut borrowing costs and support demand but the central bank would be careful not to encourage shaky debts.

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Rio Tinto Group the iron ore exporter, agreed to a 33% drop in contract prices with Japan’s Nippon Steel Corp.

Rio Tinto Group, the world’s 2nd largest iron ore exporter, agreed to a 33% fall in agreement prices with Japan’s Nippon Steel Corp., the first downfall in 7 years as the worldwide recession cuts demand.

London- based Rio said today in a statement Nippon Steel, the world’s 2nd largest steelmaker, contracted to pay Rio Tinto Group 97 cents a dry metric ton unit, or about $61 a ton, for its standard product in the year started April 1. That compares with last year’s record of 144.66 cents for Rio’s Pilbara Blend fines.

Rio’s iron ore unit chief executive Sam Walsh gave a statement that- “We believe this settlement is a realistic outcome for both parties, one that reflects the global market for iron ore and the current challenging market conditions facing our customers.”

Rio share went up 1.2% to A$64.82, reversing an earlier down fall of as much as 1.7 %, at 2:07 p.m. Sydney time on the Australian stock exchange. Nippon agreed to pay 112 cents per dry metric ton unit for Rio’s premium Pilbara Lump product, 44% lower than last year’s contract price, the statement said.

Rio last year won an 80% gain in fines prices with Asian customers and a 97 %rise in lump prices. Australia’s 3rd largest iron ore exporter, Fortescue Metals Group Ltd., jumped as much as 8.3 % and Mt. Gibson Iron Ltd. as much as 9.1%.

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G24- Developing Countries harder hit by Global Recession

Group of 24 nations said on Friday the global financial and economic crisis is hurting to developing countries, which will have to deal with the fallout long after advanced economies.

The G24, made up of developing countries from Latin America, Asia and Africa said quick turn down in increasing and falling currency reserves were leading to growing unemployment and poverty levels.

The risks of a more protracted worsening in the world economy remain significant a G24 communique said after a meeting on the sideline of the spring meeting of the World Bank and International Monetary Fund.

The communique noted the crisis had originated in advanced economies and was affecting developing economies through sharp falls in remittance, exports, private capital flows and a global credit crisis.

The group said that developing countries will require unprecedented and urgent support from global financial institutions like the World Bank and IMF.

The G24 also supported an early review of the role of the IMF in the international monetary system, including the role of major currencies like the Euro, Yen, Dollar and British Pound.

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