Discussion in 'Currencies' started by Ouch, Jul 27, 2011.
Source: Sydney Morning Herald
bring it on
Yeah i agree my holiday is getting longer by the minute.If it hits $1.50 i might not get back till christmas
It would probably mean that PMs would fall in AUD,
30 -40% unless it rises that much in USD.
Bad for us.
Unless your buying.....
I don't really see it happening to be honest the RBA would intervene in the markets before it got to that stage as our industry's would be getting killed. The RBA already stated earlier this year when the AUD was around this point that FX intervention would be considered.
I find it's usually when the media is coming out with crazy predictions then thats the time to dump it, abit of a contrarion view.
Who can say, 'global coordinated currency devaluation'
The $A should be $1.30 + yesterday, and pop tomorrow.
The AUD dazzles and the USD fizzles.
It is not us being strong, it is them being weak.
they were fine with the aud being 0.50 usd. 1.50 is just the other end of the spectrum.
I think the RBA would intervene if it gets to 1.20+ territory. I good start would be for them to print and buy up all that foreign debt held by the big 4 to get rid of the forign counter party risk.
Gutsy call that
Not sure just what the RBA can do. The AUD is floated and subject to the market. It SHOULD go where the market takes it, without interference.
...and i cannot see the RBA buying all those Bonds issued by the Big 4, it is BILLIONS or thereabouts. And what if the holders do not want to sell?
Here is the article i was refering to earlier:
RBA willing to intervene in FX: Stevens
February 11, 2011
The central bank isn't currently seeking to intervene in foreign exchange markets, but is willing to occasionally, Reserve Bank of Australia (RBA) governor Glenn Stevens has told a parliamentary committee.
Mr Stevens was asked why foreign exchange purchases seemed to have ceased in the past six months.
"We are typically not seeking to do intervention either way just at the moment," Mr Stevens told the House of Representatives Standing Committee on Economics on Friday.
Your right it is billions over 350 of them. To answer your question and it is also an answer to questions I have asked of you previously when you trotted out the main stream artillery and refused to answer.
Over half of those 350+\- Billions are on short term lending so they are all rolled over continuously under 1 year but that TOTAL amount is lent long=25+ years. When roll over time comes all the RBA has to do is offer to buy them at an even lower rate than they currently are (or less than the roll over offer from other lenders). It is exactly what the Fed is doing right now in the US. OC I thought your extensive banking experience would have prevented you from asking such a rookie banking question? They could also roll that debt over at longer term rates and give the big 4 the stability that they don't currently have because of short term counter party risk.
All in one go you kill two birds with one stone, foreign counter party risk is removed and 350+billion is removed from off shore lenders and through inflating the money supply they devalue the AUD to make exports and tourism competitive again..
For the record I in no way would support such a move and would oppose it at every turn. It's got the opposite of sound money written all over it.
Industry is already on the ropes!
One of our best earners at the University is foreign students, we have seen a drop in the North American Students because of the strong Aussie dollar, they are chosing Universities in the Caribean as they can't afford to come here anymore. That isn't just going to hurt us now, these are four year courses so if they don't come now we have lost four years of course fees, even if the dollar drops now we have still lost those four years.
We have seen several bookings for eight week overseas student exchanges fall through as european students can no longer afford to come over. On the plus side our students can still afford to go abroad so our hospitals get a bit of breathing space.
I remember reading somewhere that it would cost approximately $13 billion to manipulate the currency by 1 cent. Haha that's quite a lot.
Well once the RBA realises that they have become a redundant institution the 260 Billion they would have to print (and still not have the foreign exposure risk paid off completely) would bring us back to parity. That will be perfect for them.
Everythings got a price
(Except true love )
buts its' different in Australia .... people have borders - banks do not ...
the central bank always wins and that's what count to the PTB
It may cost $13 billion to move the AUD 1c but i suspect simply the submission by the RBA that they are going to intervene in the FX market would put investors off.
This is why Rudd and Swann last time the RBA raised the idea of FX intervention were very quick to put word out on Bloomberg that Australia would never intervene in it's currency.
You also can't rule out the possibility of a G7 commitment to sell AUD for currency depreciation like seen in Japan but i would suggest that would only occur once it was evident that our economy was seriously struggling due to currency speculation.
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