The Australian dollar lost around 1.25% in overnight trade.
That made it the second biggest mover in the G10 currency pairs closely pacing the move in the USDJPY which fell 1.4%. The Aussie’s fall was around half a percent more than the Kiwi’s dip, and around 0.75% more than the fall in the Canadian dollar.
Part of that is likely renewed concerns about global growth. But some responsibility likely also rests with RBA board member John Edwards, who told Ticky Fullerton on ABC’s The Business that he thinks the dollar should be lower.
Edwards echoed comments made earlier this week in RBA governor Glenn Stevens’ post-board meeting statement that an “appreciating exchange rate could complicate the adjustment under way in the economy”.
“I think we’d be better off if the dollar was lower, and quite a bit lower,” Edwards said.
Although he added “it does complicate things but it doesn’t complicate things quite as much as it might. Our exports have been doing pretty well in volume terms they’ve been up well”.
Asked where he see’s the dollar going forward Edwards said, “I wouldn’t even guess, we’ve had commodity prices not falling as they were, in fact they’re up a little bit compared to January”.
He added that he didn’t know how long that commodity strength would last, but that the strength had given “an impulse to the Australian dollar”
Edwards also noted that the Aussie dollar strength was a result of actions by central banks around the world.
“We’ve seen somewhat easier monetary policy adopted in Europe and Japan even compared with where they were and a more cautious approach to tightening in the US so that hasn’t helped either,” he said.
On the outlook for interest rates Edwards reiterated the governor’s comments that “low inflation does provide scope to do more if we need to do more”.
“But that wasn’t the case at this meeting,” he added.
The fact that Edwards said that he is more concerned about the global economy now than last year suggests perhaps it might be the case in the future.
You can watch the full interview here.