The new and outspoken RBA board member, Heather Ridout, yesterday added the RBA’s voice to keeping the dollar elevated. From the AFR:
“The Japanese election and statements by politicians had contributed to a significant depreciation of the yen since November.”
Fair enough. We all know that the jawbone is a powerful tool for the senior macro manager and should be deployed wisely. She went on:
“Currency issues are a very big game in town,” Mrs Ridout, a former manufacturing industry lobbyist, told the Australian Workers’ Union conference on the Gold Coast.
But Australia’s floating currency meant “there’s not an awful lot that can be done about it,” she said.
Late last week, Wayne Swan reversed a quite promising fall in the currency with similar comments. Perhaps unsurprisingly after the RBA joined in, last night the dollar enjoyed heavy buying.
Why are our combined monetary and fiscal powers wasting their jawboning powers on attacking Japan? They are implicitly boosting the Australian dollar by doing so then explicitly boosting the Australian dollar by ruling our economy out of the same game.
Silence would be preferable.
