RBA bashes Australian dollar in Washington

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From the AFR:

Reserve Bank of Australia deputy governor Guy Debelle has said that unintended victims of the US Federal Reserve’s unprecedented monetary policy stimulus have been told to “suck it up sunshine” because a stronger US economy benefits all nations.

Speaking in Washington at an International Monetary Fund conference overnight, Dr Debelle appeared to partly blame the US Fed’s bond buying program for pushing Australia’s currency out of step with its economic “fundamentals”.

“In Australia’s case, the issue is exchange-rate appreciation [that] is not in line with fundamentals,” Dr Debelle was quoted as saying by Bloomberg.

The problem for Australia and smaller economies like it is that “you’ve got an exchange rate moving out of line with fundamentals because of financial factors”, he said.

Dr Debelle told the conference that a persistent period of currency misalignment could cause so-called Dutch Disease, named after Netherlands’s experience of a surge in growth in its energy industry that drove up the currency and hurt manufacturing.

Can someone pinch me. Did the RBA just use the phrase “Dutch disease”?

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Too little, too late fellas. Give the forex world some policy changes to worry about.

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.