Forget the fact that the RBA just left rates on hold at 2.5%.
Forget the fact they signalled, once again, that rates are on hold for some time yet and the recovery, however tentative or moderate, remains on track.
What is remarkable about RBA Governor Glenn Stevens’ statement this afternoon is that, even after a 7% fall during the month of September, he is not finished telling traders that the Aussie dollar should still head lower.
“The exchange rate has declined recently, in large part reflecting the strengthening US dollar, but remains high by historical standards, particularly given the further declines in key commodity prices in recent months. It is offering less assistance than would normally be expected in achieving balanced growth in the economy.”
No doubt Stevens is cautious about signalling and joy at the Aussie dollars fall after the market misinterpreted his comment last time the Aussie fell into the 87 cent region back in January.
In his February statement Stevens noted that, “The exchange rate has declined further, which, if sustained, will assist in achieving balanced growth in the economy.”
The Aussie rallied 2 cents against the US dollar in 24 hours as a result and Stevens added the now famous, “though the exchange rate remains high by historical standards” to his March statement.
So once bitten, twice shy.
The Aussie is largely unmoved at 0.8750 by today’s statement – a victory for the Governor, his Board and the Australian economy.
You can read the full statement here