Reserve Bank of Australia out with 2017 Annual Report 14 Sept

  • loss reflects exchange rate appreciation over the period
  • a dividend of $1.3 billion will be paid to the Australian Government.

Says Governor Lowe:

  • In 2016/17, the Reserve Bank recorded an accounting loss of $0.9 billion, reflecting valuation losses on holdings of foreign assets due to the exchange rate appreciation over the year. The underlying rate of return on the Bank's assets remained low, a result of the low level of interest rates in Australia and elsewhere.
  • Over the year, underlying earnings were $1.0 billion and an additional $0.3 billion was earned in realised capital gains.
  • The Reserve Bank Board is committed to the Bank having a strong balance sheet so that it can effectively perform its operations under a wide range of scenarios. As the balance sheet has grown over recent times, there has been an increase in the share of the Bank's assets that have relatively low market risk. Given this change, the Board undertook a review of the capital framework during the year to ensure the amount of capital held against the various assets is determined by the risk of those assets.
  • The new framework at present delivers a similar dollar target for capital as the previous arrangements, but is more sensitive to risk. With the current balance in the Reserve Bank Reserve Fund consistent with the Board's target capital level, the Bank did not seek a transfer to this fund in 2016/17. Accordingly, with the unrealised valuation loss being absorbed by previously accumulated unrealised gains, a dividend of $1.3 billion will be paid to the Australian Government.

Full report here

AUDUSD currently back below 0.8000 after failing into 0.8020

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