Australian dollar…stable for now

April 21, 2015

The Australian Dollar (AUD) continues to consolidate around the lows reached since the commencement of its significant fall last September. The attractiveness of high real short term interest rates relative to other developed countries has offered the currency some support over recent weeks. But with commodity prices softening further, economic growth in China slowing and a cautionary approach by international investors towards Australia, the prevailing economic landscape is conducive to further weakness in the value of the AUD.

The Governor of the RBA, Glenn Stevens again last night expressed a desire for the AUD to depreciate further and stated that ‘ The Australian dollar has declined and will likely fall further yet, over time”. With market forces and the central bank working against it, it is difficult to see any form of sustained rally in the currency for some time.