Australia's Central Bank Says Its Currency Is Way Overvalued
In a separate December 14 document, the RBA also said its preferred model showed it was 7 percent overvalued.
The information was released in response to a Bloomberg Freedom of Information request (FOIA).
The
Here's a look at how the AUD responded to the news it is down to the 1.02 level.:
The AUD/USD has been trading in a 1.03 to 1.06 range since last November, and Societe Generale's Carole Laulhere and Kenneth Broux say in a February 5 note, that the AUD's valuation has been high compared to its 10-year average:
But for those thinking this could add to the currency wars, there's reason to believe otherwise.
The RBA said the situation in "Australia [is] not considered comparable to circumstances which led Switzerland to intervene on foreign-exchange market," according to the document released to Bloomberg. It said the AUD doesn't post a near-term risk of deflation nor is it "contractionary" for the economy.
Moreover, earlier this week, RBA Assistant Governor Guy Debelle spoke at the University of Adelaide, and said, the RBA could act to devalue its currency by buying foreign currency like the Swiss National Bank did, but it won't unless there is a huge change in the Australian economy or in the value of the Aussie dollar, according to the Brisbane Times.
- I spent $2,000 for 7 nights in a 179-square-foot room on one of the world's largest cruise ships. Take a look inside my cabin.
- Colon cancer rates are rising in young people. If you have two symptoms you should get a colonoscopy, a GI oncologist says.
- Saudi Arabia wants China to help fund its struggling $500 billion Neom megaproject. Investors may not be too excited.
- Catan adds climate change to the latest edition of the world-famous board game
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- Tired of blatant misinformation in the media? This video game can help you and your family fight fake news!
- JNK India IPO allotment – How to check allotment, GMP, listing date and more
- Indian Army unveils selfie point at Hombotingla Pass ahead of 25th anniversary of Kargil Vijay Diwas