http://www.bloomberg.com/news/2011-...rd-currency-as-yuan-stays-weak-rudd-says.html world is going insane, really quickly..
this is an issue as silver is priced in USD, if the AUD/USD ratio keeps climbing the any movement in spot will be swallowed/mitigated by the USD tanking. Anyway around this or do ppl think that australia will eventually have to devalue its currency?
We are #12 on this list: http://en.wikipedia.org/wiki/Highest-valued_currency_unit Wouldn't really need to devalue our currency, it should be fine for now i think. The scary thing is, even though AUD is climbing, the silver price is climbing as well! If you think about it thats double the climb >_<. Stack both graphs together and you have one scary almost vertical rise :/
3 cents in 2 days is less than 3%, silver is gaining about 4.5% in the same time. it's the aud gold price that's actually devaluing slightly..
What is the Foreign Minister doing making a statement like that? Does he think that he is the Treasurer?
He's Kevin. Isn't that title enough? Gold price isn't going up, USD is going down. Silver is going. Prices in AUD are pretty reflective of change in value. Last thing we want to do is devalue.
Why is that? Most western countries and China seem to be trying to devalue to keep their exports viable, I don't understand why Australia isn't doing so also. What would be the negative impact of our government devaluing the dollar? (And what are we gaining by not doing it)?
What we are gaining by not doing it is capital. If we hold the line and retain the value in our currency, capital will move here. Nobody wants to lose money through the devaluation of currency. More capital -> more jobs, more development. Add to that the relatively high interest rates here, and a stable legal and economic environment. Which is why the MRRT hurt us so much - changing the rules mid game is anathema to capital.
Yeah, gold and silver. Higher petrol prices, which in turn will lead to higher food prices, which in turn will feed inflation, which in turn will lead to higher interest rates, which in turn will squeeze the over-indebted, which in turn will lead a decrease in confidence and spending, which in turn will lead to higher unemployment, which will lead to lower taxation revenue, which will lead to greater taxation and government deficits, which will eventually lead to a semi or total collapse of government, depression, war and general pestilence. Better not to dick around with price controls, particularly with the price of fiat currency/legal tender. Price controls end up with nasty consequences.
He doesn't need to be. The RBA has had a policy for about 20 years of not intervening in the currency markets to manipulate the value of the AUD for reasons of economic competitiveness - basically, we don't play "currency wars". The RBA does intervene if trading in the AUD starts to swing wildly in one direction or the other to smooth trading out, but they don't deliberately push it higher or lower. (If anyone remembers, the RBA made billions in currency trading a few years back just on the extreme volatility of the currency during the GFC. The AUD plunged for no reason other than panic and the RBA bought up big to put a floor on it and provide some certainty and then sold the AUD when the market got its head together and the price stabilised). I'd say the Foreign Minster was simply restating existing policy for the benefit of people who weren't aware of the RBA's position - they only get involved when people are being silly, not when it would simply be convenient for our terms of trade. Edit - speeling
"Never believe anything until it has been officially denied."--Otto von Bismarck "The lady doth protest too much" -- William Shakespeare I think this is a precursor to the G7 stepping in to stop the USD disappearing from view and building a framework for the as fast as possible establishment of a new world currency. Soothing words to calm the herds.
