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The Australian dollar weakened following Japanese Prime Minister Shinzo Abe called for a snap election next month, bolstering the US dollar.
On Wednesday, the Aussie trading at 86.92 US cents, down from Tuesday’s 87.19 US cents.
The currency started the trading session in a sturdier position but declined sharply in late morning trade following Tokyo’s share market opened stronger.
On Tuesday night, Abe dissolved the Lower House and called for early elections on December 14, devitalizing the currency.
“If there is a jump higher in the US dollar against the yen, then it often spills over to a stronger dollar in a number of regional currencies - so the other Asian currencies go down and the Aussie gets caught up in that,” said Sean Callow, Senior Currency Strategist at Westpac.