Mystery central banks buying Australian dollars

See the latest Australian dollar analysis here:

Bonds, not stocks or houses, are pointing to Australia’s future

According to the AFR, the RBA is in the dark when it comes to which central banks are buying Australian dollars. From yesterday’s FOI release:

Some of the buyers, including Germany and Russia, were apparently identified from media sources.

…Brazil, Poland, Hong Kong and South Korea are among other central banks listed as buyers.

Peru, Malaysia and Singapore are among those listed as possibilities.

The list confirms the Czech Republic, Kazakhstan and Switzerland as buyers, as reported in The Australian Financial Review.

Vietnam, Abu Dhabi, Kuwait and Qatar, which were identified by the Financial Review as buyers, do not appear on the list.

South Africa is listed with a note that the country “doesn’t seem to be” a buyer of dollars, Israel “apparently so”, while the United States Federal Reserve is “apparently not” a buyer.

China, which is widely acknowledged in the financial markets to be a large buyer of Australian government debt and on the verge of investing in state government securities, is listed, quite literally, as “???”

 

David Llewellyn-Smith

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.

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Comments

  1. Deus Forex Machina

    The CB’s buy AUD through the Majors or US and European IB’s so the RBA won’t necessarily know who or how much and till much later if ever.

      • Mr SquiggleMEMBER

        I’m not a specialist in this area, but if they bought directly from the RBA (and not from the general pile of AUD in circulation), wouldn’t that be the equivalent of printing new money?

  2. Would I be right in assuming that other CB’s holding substantial $AUD would tend to stabilise the currency and act as a volatility absorber – at least to a degree?

    • Aussie Contrarian

      Yes Peter, you’re right, and this is one of the reasons why the AUD hasn’t been falling like it should. Spot on.

      • HMmmm – well I don’t think that it would stop falls, but while the CB’s hold substantial reserves it will cushion both falls and gains, but if they dropped their holdings it would promote falls.

        IMHO.

        • Aussie Contrarian

          If they keep buying as discussed in this article it will put upward pressure on the dollar. Obviously the reverse if they start selling buy I can’t see that happening while Aus has the highest interest rates in the developed world.

          • Yes during the accumulation phase. I would then expect them to protect their investment and buy if the price fell, and take profits when it rises – hence my “shock absorber” quote above.

            But what would I know?