US Treasury Critical of RBA Talk

The Reserve Bank of Australia’s attempts to talk the local currency lower last year prompted criticism from the US Treasury. The US representative office at the International Monetary Fund in September “expressed concern over the authorities’ public statements on the desired direction of the exchange rate” during consultations on Australia, according to a report issued on Monday in Washington.

In August, the RBA’s monthly policy statement modified its reference to the exchange rate. After saying that currency “depreciation seems both likely and necessary” in July, governor Glenn Stevens said in the following month that, “the Australian dollar is adjusting to the significant declines in key commodity prices”.

“Every country at the moment typically wants a lower exchange rate,” said Richard Grace, chief currency and rates strategist at Commonwealth Bank of Australia in Sydney. “If a central bank says the exchange rate should be lower based on fundamentals, then they’re not breaching any guidelines according to the IMF or the US Treasury. When they step out of that, I guess this is why Australia has been pin-pointed.”

The Age

Stuart McPhee
Stuart McPhee
Australian private trader for nearly 20 years, author, trading coach, licensed adviser and regular speaker at major trading events all around the world. Graduate of RMC Duntroon and former Australian Army Officer.