Aust dollar rises in early trade

Local currency extends modest trek towards US90c after RBA cut.

The Australian dollar has held onto its gains after rallying on the back of yesterday's central back interest rate cut.

At 0630 AEST, the local unit was trading at 89.86 US cents, up from 89.81 cents on Tuesday.

On Tuesday afternoon, the Reserve Bank of Australia cut the cash rate by a quarter of a percentage point to a new record low of 2.5 per cent.

A rate cut would normally put downward pressure on the Australian dollar but the fact that the RBA gave no indication there would be further reductions helped support the currency.