Australian dollar

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AFR talks up the Australian dollar

Jonathon Shapiro of the AFR has a disconcerting opinion article today on the demand among foreign investors for Australian debt. He recounts a tale of foreign guests of the Commonwealth Bank touring Sydney’s The Rocks to listen to the RBA’s Phil Lowe over dinner: “…from China, Russia, Japan, Ukraine, Indonesia, Sri Lanka and beyond were not

9

Is the RBA intervening in the Australian dollar?

FTAlphaville has run two excellent posts in the past day on the RBA’s passive accumulation of foreign reserves. Find both cross-posted below. The RBA – leaning against the wind Is the Reserve Bank of Australia intervening in the market to hold down the remarkably resilient Aussie dollar? That’s the question commentators and economists are asking themselves

1

Macro Morning: Late rally

Stock markets are under pressure again this morning and back toward the bottom of recent ranges as concerns of the global economy remain top of mind. Trade data from Japan yesterday showing that exports fell 10.3% in September was worse than the punditry’s already jaundiced expectations of a fall of 9.9%. But it seems to

17

Australian dollar weakens on the crosses

Given the pounding the Australian dollar has taken over the past two day’s data, it is holding up pretty well against the US dollar. But a closer look suggests that the Battler is swooning a little more than appearances. I am pleased to observe that against many of the crosses the currency is weakening consistently.

11

Latin America buys Australian jobs (and dollars)

Latin America is a large commodity producer and competitor to Australian mining and agriculture. But why let that worry you when they want to buy your currency? From the AFR: The Australian dollar’s popularity with investors and offshore central banks shows little sign of slowing, with new data showing increased appetite from emerging markets for AAA-rated

11

Is the worm turning for the Australian dollar?

There is a cracking story in the Wall Street Journal overnight about the Australian dollar and Caterpillar and their correlation by Stephen Bernard and Vincent Cignarella. In it they say, The 30-day correlation between Caterpillar stock and the Australian dollar-U.S. dollar exchange rate is currently 0.85, where 0 means there is absolutely no discernable pattern

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Currency Wars, the book

James Rickards’ recent book, Currency Wars: The making of the next global crisis, is worth reading if you are interested in a history lesson of international monetary politics. As you can probably tell from the title, the book’s central thesis is that currency values are primarily the result of domestic and internationally coordinated policy decisions,

12

Philippines buys Australian dollars (and production)

From the AFR: The finance secretary of the Philippines has confirmed his central bank is buying Australian dollars, despite Reserve Bank of Australia documents released this week which said the island nation was not a buyer. “The Australian dollar is part of it and an increasing part of it,” Finance Secretary Cesar Purisima toldThe Australian

12

Mystery central banks buying Australian dollars

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,

12

APRA is pushing up the Australian dollar

Whilst the RBA and politicians dance around addressing the strength of the Australian dollar, crushing many productive sectors of the economy, APRA and Mega Bank use policies that pass massive risk to the taxpayer and inflate the level of the AUD. How so? The traditional and “official” view is that if a financial institution or

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23 central banks hold the Australian dollar

Missed this earlier from the SMH: The Reserve Bank of Australia says the dollar is held by as many as 23 central banks from Brasilia to Moscow, documents showed. The central banks of Brazil, Russia, Germany, Hong Kong, South Korea, Poland, Sweden, and Switzerland are among 15 economies that hold the Australian currency, according to

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Time to bring down the Australian dollar

One of the more strident ideas that have put forth by Australia’s chorus of economic elites – which includes the Government, RBA and senior media commentators – is that there is nothing that we can do about the high Australian dollar. This is poppycock. Let me explain. The Australian dollar is rising once more because

14

HSBC: Australian dollar to tumble

From The Australian: THE soaring Australian dollar is poised to tumble as lower interest rates, an escalating US fiscal crisis, and more Federal Reserve asset purchases conspire to push the high-yielding currency significantly below parity against the greenback. That’s according to strategists at investment bank HSBC, who say the so-called Aussie may sink to as

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Australian dollar to fall

There’s an institutional research report about the Australian dollar that has gained a lot of attention around the world in the past few days. It is by a boutique insto research firm called Variant Perception. Called “Australia: The unlucky country, it argues: A substantially weaker currency in Australia is inevitable given fundamental factors. Oversized banks

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McKibbin: Australian dollar intervention is not heresy

Cross-posted with permission from Interest.co.nz. By Alex Tarrant Australian economist Warwick McKibbin says he was surprised by the reaction to an opinion piece arguing the Reserve Bank of Australia could take upward pressure off the currency by printing Australian dollars and buying foreign exchange to offset foreign central bank purchases of the currency. Speaking to

21

Henry says high dollar to Hell and back

From AAP: Former treasury boss Ken Henry has told business the Australian dollar is likely to remain high for the foreseeable future. Dr Henry told the Australian Industry Group forum in Canberra it would not be prudent to bank on an early sizeable depreciation in the exchange rate. “There is no silver bullet that is

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Cut rates for a lower dollar

That’s the argument made by many MB commenters and today by Westpac’s Huw Mackay (of Phat Dragon fame)  at the AFR. …the most recent balance of payments data show that gross foreign purchases of Australian assets were 42 per cent debt and 58 per cent equity. Westpac proprietary customer data shows that foreign sovereign purchases

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China stamps Australian dollar with reserve currency status

Here’s something MB missed yesterday (as did the entire Australian press) and may in part have triggered the McKibbin story overnight. From Alphaville: SYDNEY-Officials within the foreign-exchange arm of China’s central bank recently met Australian regional governments to discuss buying their bonds, people familiar with the matter said. The securities – known as semi-government –

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McKibbin urges RBA to force down Australian dollar

By David Llewellyn-Smith Thank heavens. Australia’s best free-thinking economist, Warwick McKibbin, has finally broken the Canberra consensus and urged the RBA to sell the dollar. From the AFR: Former Reserve Bank of Australia board member Warwick McKibbin is urging the central bank to intervene in currency markets to limit the strength of the dollar, suggesting

22

Central banks piling into Australian dollar

From the WSJ: Germany’s Bundesbank is expected to begin adding Australian dollar assets such as government bonds to its foreign reserve holdings before the end of September, bankers say. The decision, which follows a two-and-a-half year review by the Bundesbank, adds to a wave of central bank demand for Australian-dollar exposures that has swelled over