RBA deputy Governor Phil Lowe’s speech today was wide-ranging, touching on the Australian economic transition and the global transition to low-interest rates.
Within his speech, there was clear evidence the lower Aussie dollar is working.
Lowe said that even though the “value of the Australian dollar has been higher than would otherwise have been,” and “a further depreciation of the Australian dollar would be helpful in the transition of the Australian economy,” the 20% depreciation of the AUD in TWI terms and the 25% fall against the US dollar is “boosting activity invarious parts of the economy.”
Take tourism for example, it’s been quietly booming as the Aussie dollar readjusts local and foreign behaviours. Lowe said:
Exports of travel services rising again, as more people visit Australia and spend more money here. Conversely, imports of travel services have declined as more Australians holiday domestically.
He added, “The lower exchange rate has also improved prospects in a number of other export-oriented industries, including some parts of manufacturing, agriculture and even mining.”
The RBA might want a lower Aussie to add more fuel to the economic transition but it’s already doing its job of stabilising economic growth.