The Australian Financial Review has published the full transcript of its interview with RBA Governor Stevens.
The headline on the story is ‘We need a dollar close to US85¢: Stevens‘ but Stevens never says that. This is the key part:
MitchellIn the SMP I got the impression that you were looking for anotherdepreciation on the order that we saw earlier in the year. On the exchange rate as itwas at the time I inferred from that we were looking for an 80 cent dollar.Stevens I am not – you know, I’m not going to sit here and put numbers on thesethings. I don’t think the extent of our knowledge about what’s correct is that good,but I did think 95 was rather too high. I thought 85 would be closer to the mark than95 at the time we started to make some comments some months ago, but, really, Idon’t think we can be that precise. I just think that if things over the medium termevolve as we’re presently assuming – and I think it’s reasonable to make theseassumptions – it’s going to be surprising if a nine at the front is the right number.
It shows the power of headline writers but it also shows that it doesn’t take much to slam the Aussie lower. The declines have continued, last at 0.8919.
Also weighing on the Australian dollar are comments from Prime Minister Abbott who told parliament about a $8 billion grant to recapitalize the RBA.
“That enables the Reserve Bank to intervene prudently and appropriately in the market to try to ensure that the Australian dollar is at the best possible level,” he said.
The thing is, $8 billion is virtually nothing if you want to intervene.