Reserve Bank documents released late last week under a Freedom of Information request from Bloomberg show that the central bank thought the currency was about 5 per cent overvalued when it was 5 per cent higher than it is now.
It was a note prepared for the September RBA board meeting, marked "confidential" and headed "Is the Australian Dollar Overvalued?" The answer: "The staff's preferred model … suggests that the exchange rate is around 5 per cent overvalued".
In August and September last year the dollar traded up to US105.8 cents. Since then the dollar has fallen to US102 cents and the iron ore spot price has rallied 70 per cent, so it's unlikely that the Reserve Bank now thinks the dollar is overvalued.
It was a note prepared for the September RBA board meeting, marked "confidential" and headed "Is the Australian Dollar Overvalued?" The answer: "The staff's preferred model … suggests that the exchange rate is around 5 per cent overvalued".
In August and September last year the dollar traded up to US105.8 cents. Since then the dollar has fallen to US102 cents and the iron ore spot price has rallied 70 per cent, so it's unlikely that the Reserve Bank now thinks the dollar is overvalued.
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