The upbeat tones from Glenn Stevens, the Governor of the Reserve Bank of Australia, about the state of the Australian economy are a change in attitude which has strengthened the Australian Dollar across the board this morning.
For the entirety of this year Mr Stevens has been painting a negative view of the economy. He feels that a cheap AUD was key to the success of the Australian economy as a whole – making their exports more competitive whilst demand was slowing for their products. His negative comments have regularly caused GBP/AUD to rise by a cent or more over the past few months.
After the events of Black Sunday last month, however, he has now changed tact. The image of the Australian economy he presents is now an optimistic one. He emphasized the economy was in a position to weather any economic downturn for the Chinese economy, and this renewed confidence has caused the Australian Dollar to strengthen from 2.17 to 2.14 on GBP/AUD rates.
His motives are two fold. Firstly, the Dollar is now cheap enough for his liking to be competitive on export markets but still be strong enough to afford the foreign imports the Australian economy requires. Secondly, he needs to show confidence after a period of extreme doubt following the recent downturn in China’s economy.
It seems a downward trend is now fully established for GBP/AUD rates. I would strongly recommend that anyone with AUD to buy should move sooner rather than later, and our regular readers should recall that rates can be pegged at their current levels if you do not need to purchase your currency until later in the year.
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