RBA’s Harper: Currency appreciation is still a worry

Dhwani Mehta FXStreet

“Even with Australia’s borders closed for almost a year now, shutting down the country’s top services exports of international education and tourism, currency appreciation is still a worry,” the Reserve Bank of Australia (RBA) board member Ian Harper said on Wednesday.

Additional quotes

“Has the weight that’s placed on what might happen to the exchange rate, when thinking about how quickly the bank achieves its objectives, has that changed? Well no.”

“Services only make up 25% of exports. The other 75% are commodities.”

On the exchange rate value, Sean Callow, Senior Currency Strategist at Westpac, noted: “The conversation around the Aussie changes when you leave the 70s. The RBA might be dismayed by the break of 0.80 but given the commodity price backing is so strong, they should take some comfort that the A$ doesn’t seem overvalued. It’s a headwind, but they saw worse in 2011-12.”

“A number as round as 80 cents is a milestone. You also have the likelihood of options strikes or stop losses around that figure,” Callow added.

Market reaction

AUD/USD is extending its corrective pullback towards 0.7900, as the risk sentient sour while the RBA board member Harper’s comments also seem to weigh on the aussie.

The spot was last seen trading at 0.7921, still up 0.14% on the day.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

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