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.