RBA tries to talk AUD down
The Reserve Bank of Australia officials keep trying to talk Australian dollar down – data provided by Bloomberg shows that AUD is overvalued by 28% versus USD.
The RBA downgraded its growth forecasts for the year to December 2014 (from 2.5-2.5% to 2-3%) and retained its scope to lower interest rates in its quarterly monetary policy statement today.
Central bank Assistant Governor Guy Debelle said yesterday that AUD is the most overvalued after the New Zealand dollar among major currencies. According to him, Aussie hasn’t tracked fundamentals and the problem for Australia and other smaller economies is that external “financial factors” are driving up currencies.
Goldman Sachs thinks that if AUD/USD doesn’t come down, the RBA will lower rates more in an effort to bring the dollar back to the “mid to low 80s” range.