Australian dollar smashed on Stevens’ joke

From FTAlphaville this morning:

Central bankers can do many things but they should never, ever attempt humour.

To illustrate the point we present the price action in the Australian dollar on Wednesday.

That’s a three year low of $0.9055 against the greenback and it followed a ‘gag’ from Glenn Stevens, governor of the Reserve Bank of Australia.

From the Australian Financial Review:

An off-the-cuff remark by Reserve Bank governor Glenn Stevens sent the dollar down on Wednesday after he “joked” a rate cut was seriously considered at Tuesday’s board meeting.

Mr Stevens’s remark, which a spokesman confirmed was intended to be a joke, was at odds with the rest of his speech, which indicated the RBA was content to keep official interest rates on hold while the falling dollar spurs economic growth.

Here, in full, is the ‘joke’.

As some of you may know, the Reserve Bank Board meeting was in Brisbane yesterday at which we deliberated for a long time to leave the cash rate unchanged.

You can see why people weren’t rolling around in the aisles. In fact there was downright confusion after Stevens delivered the ‘gag’ in his usual deadpan style.

From JPMorgan:

Taking the speech itself, we would view Stevens’ assertion that “no-one can pretend to be able to fine tune this ‘handover’” of growth as being supportive of our call for later rate cuts. There is a substantial caveat though, which is that Stevens was quoted as saying that the Board “deliberated for a very long time yesterday”. This is a puzzling remark, first because it was not in the speech, and was reported on the newswires before the Q&A session was reported to have started. Perhaps Stevens (uncharacteristically) went off-script during the speech, or (again, uncharacteristically) made a casual remark before his prepared remarks began.

Or (again uncharacteristically) made a joke.

Still he who laughs last, laughs longest.

To me this funny (sort of) for another reason. The joke is surely that Stevens should not have been joking, born out by the fact that the dollar has not recovered from the joke.


  1. My god! Million dollar man Capt Glenn is either incompetent or corrupt or both..

    IMHO, He should resign or be fired.

    • Magnus Carlsen

      “Deadpan is a form of comic delivery in which humor is presented without a change in emotion or body language. It is usually spoken in a casual, monotone or cantankerous voice and expresses an unflappably calm, archly insincere or artificially grave demeanor, often in spite of the ridiculousness of the subject matter. This delivery is also called dry humor or dry wit, when the intent, but not the presentation, is humorous, blunt, oblique, sarcastic, or apparently unintentional.”

      Sounds about right for Captain Courageous… sans the wit and humour though.

  2. He’s been trying to jawbone down the dollar for 12 months or now. This “joke” would have had no impact a year ago, but these days he can’t open his mouth without wiping a cent off the dollar.

    • Please! Don’t give Glenn “housing is affordable” Stevens, the jawbone fig leaf to cover himself.

      We should ponder on the double standards in the media framing of this story – when an elected leader states the bleeding obvious (“China boom is over”), he is “talking down the economy”. But when a unelected, overpaid bureaucrat makes a blunder, he develops a halo over his head, becomes the invisible hand and “jawbones” the market.

      (HnH .. Apologies for the many mixed metaphors :))

  3. I really hope for the sake of Australia that he continues to make “jokes” like that. Every cent down makes us more and more competitive.

  4. Charles Ponzi

    More likely a deliberate ploy to bring down the Australian dollar without actually lowering interest rates.

    Stevens knows only too well that Australia is running out of bullets.

    Australia has joined the Currency Wars. Does our future include Quantitative Easing?

    • I reckon you are dead right Charles. He got the best result that he probably hoped for.

  5. The bigger joke is that nowhere in his speech yesterday was there any mention of the key reason the exchange rate rose so high and then stuck there when the terms of trade declined.

    The fact that he admitted he was surprised by this is a clue to just how clueless the RBA have been when it comes to the impact of overseas Central Bank QE and ZIRP on our currency. Reading his speech one would be left with the impression that all we have seen is the exchange rate acting in response to a mining boom.

    The movements in our currency have been far more than a natural response of a floating currency to a mining boom. The currency has been lifted by a large ocean swell of easy money when we should have used capital controls to limit the impact.

    Now that the holders of that easy money are worried about tapering the tide is turning and the money is heading back out the door in an increasing rush.

    Gov Glenn’s little joke yesterday is less amusing when you consider that the RBA and the govt allowed the wave of money to wash in in the first place and damage all those sectors that are finely tuned to our exchange rate.

    Hopefully, there are still some sectors and companies that can regenerate now that the money tide is running back to sea.

    • I can’t help but have an image of a muddied old Digger with six bullet holes in him staggering up out of a muddy ditch and taking on the surrounding enemy batallion and thinking he’ll win because he’s feeling a bit better because there is a break in the clouds.

      Our industry is shot to pieces and we’re still carrying all the lead.