Aussie dollar hasn’t fallen enough to stop RBA rate cuts…yet

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The Australian dollar has dropped moderately over the past month or so, from around US$1.05 to the US mid-90c range. It naturally begs the question: has the $A dropped by enough to rule out further interest rates declines?

Indeed, will the weaker $A seriously add to inflation and/or quickly restore competiveness to our hard pressed trade exposed sectors?

The answer to most of these question is a resounding no – or at least “not yet”. After all, the $A has only declined by around 8% so far, and still remains well above its average since the mid-1980s of US75c.

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