- Reserve Bank of Australia
The Australian Dollar strengthened against its US counterpart even after minutes from the latest Reserve Bank of Australia's recent meeting showed policy makers' dissatisfaction with current levels of the nation's currency, reiterating it was still above the fundamental value. Despite sharp declines in commodity prices since January, a key catalyst of the exchange rate over the long term, the Aussie Dollar was overvalued at the end of October against the currencies of Australia's trading partners, the RBA noted. Thus, the exchange rate has been "offering less assistance than would normally be expected in achieving balanced growth in the economy," the RBA said.
The board members decided to keep its benchmark cash rate at 2.5% for the 15th straight month at the November meeting, and signalled that it was likely to remain there for some time, helping to boost demand as the economic transition away from mining-driven growth continues to put pressure on employment and investment levels. In addition to that, Reserve Bank Governor Glenn Stevens said he wanted to ensure a housing price boom does not turn to a bust and undermine economic growth. Another growing concerns for Australia is how the Chinese property market will evolve, with recent weakness posing a threat to Australia's export sector.
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