The Australian dollar is still higher than it should be despite its recent decline, the Reserve Bank says.
RBA assistant governor Guy Debelle on Tuesday said the currency remained overvalued, although it had fallen around six per cent against the US dollar in September.
“The Australian dollar has depreciated in recent weeks, but on a trade-weighted basis is only back to levels of earlier in the year,” Debelle said.
“Over that same period, Australia’s terms of trade has continued to decline and some key commodity prices for Australia, most notably the iron ore price, have declined considerably.
“On that basis, the Australian dollar is still higher than most conventional estimates of fundamentals would indicate, notwithstanding its recent decline.”
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The high exchange rate was offering less assistance than would normally be expected in achieving balanced growth in the economy, he said.
“A lower exchange rate would be helpful in achieving that objective,” Debelle said.
The Australian dollar earlier in October reached a four-year low of 86.43 US cents.
Early today the local currency was trading at 87.63 US cents, up from 87.34 cents on Monday.
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But minutes after Debelle’s remarks, it fell from 87.63 US cents to 87.55 US cents.
China’s trade surplus more than doubled to $US31.0 billion ($A33.54 billion) in September, official data showed on Monday.
Exports from the world’s second-biggest economy beat expectations, rising 15.3 per cent to $US213.7 billion.
The figures gave the Australian dollar a boost on Monday which continued overnight, Westpac senior market strategist in Wellington Imre Speizer said.
But continued weakness on global share markets could drag the Aussie dollar lower again on Tuesday, he said.
“Yesterday’s strong Chinese trade data gave the currency the boost,” Speizer said.
“But even though it was a holiday in the US, equity markets in the states sold off heavily overnight and that may have an effect on the Aussie today.”
