RBA Governor Glenn Stevens Wants The Aussie Dollar To Fall To 75 Cents

Getty/Mark Wilson

The RBA has been reluctant to intervene in the foreign exchange market by selling the Aussie dollar to drive it lower over the past few years as the terms of trade have been falling.

But that hasn’t stopped RBA Governor Stevens from jawboning the currency (talking it down).

Stevens famously painted 85 cents as the level the Aussie should fall to a year ago, but in an interview with the AFR he has doubled down, saying the Aussie should be headed to 75 cents.

Stevens said that Australia’s terms of trade, while “historically high still” were “falling further and faster, than was a assumed a year back.”

Which means that “in a year from now” the Aussie dollar will be lower than where it is at the moment Stevens said adding that:

On the basis of the facts that we presently have. And, yes, a year ago I said probably 85US cents was better than 95. And if I had to pick a figure now, I would say probably 75 is better than 85.

The Aussie made a fresh 4 and a half year low overnight at 0.8213 and even though it has rallied back to 0.8252 Stevens is leading traders to a realisation that they will eventually make for themselves. That is: that the Aussie dollar needs to head lower to reflect fundamentals.

The full interview’s at the Fin.

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