This article is from late yesterday and continues on with the discussion of the AUD as a reserve currency (I posted on Monday: Australian press: “Reserve status aided Australian dollar’s ascent”)
- This article makes the point that the AUD is about to included separately in IMF data as a ‘reserve currency’
- That liquidity is much improved
- That the National Australia Bank reckons the data could show that as much as 2% of the near $11 trillion of total global reserves, or the equivalent of $200-250 billion, is being held in AUD
The article concludes:
continued demand from central banks could make it harder for the RBA to drive the currency lower.
But the upside is that, as central banks tend to keep their reserves for years, the Aussie is unlikely to face a selloff at the first sign of trouble, as is often the case when foreign investors dominate a market.
In other words, fears of capital flight from the Aussie are overdone and the Australian currency is showing signs of growing up.
