Will The RBA Attempt To Weaken AUD?

Increase in Risk Appetite Helps Support the Australian Dollar

The Aussie Dollar’s recent strength against Sterling was put on hold yesterday, as speculation surrounding the prospect of an interest rate cut from the RBA weighed on the value of AUD.

I’ve written previously about how the strengthening Aussie Dollar could pose a threat to the economy of Australia should the currency become overvalued, and I think the RBA will act when either US Interest Rates are increased, or when the Aussie economy begins showing signs of a slowdown that’s directly a result of an overvalued currency.

The increasing commodity prices have so far this year stimulated the Australian economy sufficiently enough for the RBA to hold back on interest rate cut’s, although last night was interesting as RBA Governor Glenn Stevens made some disparaging comments with regards to the Aussie Dollar, stating that ‘an appreciating exchange rate could complicate the adjustment under way in the economy’.

If this was an attempt to ‘jawbone’ (encourage the weakening of a currency by talking it down), then perhaps we can expect to see further attempts by prominent personnel to weaken the currency so anyone interested in AUD’s value should pay close attention the wording used by Australian Monetary Policy decision makers.

If you are planning to sell AUD to buy a foreign currency it may well be worth your time getting in contact with me (Joseph Wright) on jxw@currencies.co.uk in order to ensure you make a well informed decision on when to make that particular transfer, as well as benefiting from highly competitive exchange rates from one of the UK’s leading foreign currency brokerages. Just provide me with a basic outline of your currency requirement and I will be back in touch with you as soon as possible.