RBA: Aussie bank offshore borrowing has collapsed

Fresh from the central bank:


Today I will discuss some recent developments in the foreign exchange market, and provide some views on the role of the Reserve Bank’s various policy measures. I will also briefly discuss a modest change to the way the Bank will be using foreign exchange swaps to manage our foreign exchange needs.

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Basically, local majors have been effectively refinancing offshore borrowing to the RBA’s TFF so their need to swap borrowings back into Australian dollars has tanked.

Once upon a time, this process would only have been driven by a balance of payments crisis. Now, with QE, it’s happy days and the bubble is free to grow.

David Llewellyn-Smith
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