The Australian dollar has bounced off lows after Treasurer Scott Morrison surprisingly won a three-way battle for the leadership of the Liberal Party, paving the way to become Australia’s 30th prime minister.

Morrison came from the middle to win the ballot although former home affairs minister Peter Dutton had been seen as the top contender in the battle that also included former deputy leader and foreign minister Julie Bishop.

Markets were concerned a win for Dutton, an arch-conservative with a hardline stand on immigration, could undermine Australia’s economic growth, which has been supported by high levels of inward migration.

The Australian dollar jumped a quarter of a US cent when Morrison was announced the victor.

The Aussie was last up 0.4 per cent at 72.76 US cents from a day’s low of 72.38.


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So far it is down 0.6 per cent for the week, after skidding 1.4 per cent overnight amid the political turmoil to become the worst-performing major currency.

‘PM Morrison is the most market-friendly option, having successfully negotiated through multiple portfolios such as social security, border security, and more recently presiding over a substantial improvement in the budget balance as Treasurer,’ said Annette Beacher, Singapore-based chief strategist at TD Securities.

Moody’s Investors Service too offered its support, saying the change in the leadership has no implications for the country’s coveted AAA credit rating.

Australian government bond futures slipped, with the three-year bond contract down 1.5 ticks at 97.970. The 10-year contract dipped 1 tick to 97.460.