MS: Australian dollar “structurally weak”

From Morgan Stanley:

We believe that AUD will be a structurally weak currency over the medium term. Indeed, there are big changes currently occurring in China; not only is the government attempting to rein in lending and prevent excessive hot money inflows, but it is also moving towards establishing a sustainable growth model that is less dependent on investment, exports and leverage. As this transition occurs, Chinese growth is set to slow.

…Additionally, as China rebalances its economy away from manufacturing/export dependence, and towards a more balanced growth strategy involving domestic demand, China’s import basket will likely change drastically. Demand for industrial metals should fall, weighing on Australia’s terms of trade, which we believe will weigh on the valuation of AUD.

At home, Australia’s capex expansion is set to slow materially as well…As Australia transitions away from its mining construction super cycle, a weaker currency will likely be needed to restore competitiveness and boost growth outside of the resources sector. Externally, central banks globally are also in the process of withdrawing liquidity from the system; EM central banks have recently hiked rates, while the Fed continues to taper off its quantitative easing program.

…On the policy front, given the economic transition occurring not only in Australia, but also the rest of Asia, we believe that the RBA will keep rates at or below the current level for an extended period.

I could have written that myself.