"The Australian dollar is still higher than most conventional estimates of fundamentals would indicate, notwithstanding its recent decline"
-Guy Debelle, RBA Assistant Governor
Business confidence in Australia declined in September from the previous month due to drop in profits and hiring amid weak economic performance. National Australia Bank's Business Confidence Index inched lower by two points to 5, the lowest level in six months, in September from a revised 7 in the preceding month. NAB Business Conditions Index also slid to 1 in September from the August reading of 3, with a figure above zero indicating improvement. Subdued profits and employment appeared to be the main reasons behind the drop in conditions last month. Growth in Australia's economy has been sapped by a sharp decline in mining investment over the last few years. Historically-low interest rates have been one of the main tools used for fuelling growth in non-mining sectors, and have had the biggest effect on construction activity, with investors looking for yield in the property market.
In the meantime, the RBA Assistant Governor Guy Debelle reiterated concerns that the Australian Dollar remains overvalued on most measures, providing less assistance that would normally be anticipated in reaching balanced growth in the nation's economy. Debelle stressed that a lower exchange rate would be helpful in achieving that goal. As a result, the Aussie prolonged declines following Debelle's statement, trading at 87.57 US cents from 87.72 cents a day earlier.
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