The RBA says the Australian dollar is still overvalued in the current economic climate, after it was buying US87.16c yesterday.
The RBA made further comments on the national currency in its November meeting minutes, saying that despite recent declines against the US dollar, it still remained high.
“Despite the recent depreciation of the exchange rate, the Australian dollar remained above most estimates of its fundamental value, particularly given the further declines in key commodity prices over the course of the year to date,” the RBA said.
“As a result, the exchange rate was offering less assistance than would normally be expected in achieving balanced growth in the economy.”
The RBA also made a point of the Aussie dollar’s strengthening against the Japanese yen off the back of the Japanese Government easing monetary policy.
OzForex manager of corporate clients told Australian Financial Review that most of the yen’s weakness had been factored into the market.
“The yen across the greenback alone has lost 6 per cent in the past month,” he said.
“If you continue to stretch it, it will need to snap back and reverse itself. We’ve already seen the initial knee-jerk reaction.”
Mr Judge said the Australian dollar was ‘stretched’ when it hit the US88c-US89c mark.