Australian Dollar Analysis

The Australian dollar has been falling, which is expected to bring long-awaited stimulating effects to the
Reserve Bank of Australia ;

1. The Reserve Bank of Australia’s cash rate target is 75 basis points lower than the Fed’s benchmark interest rate limit, the largest spread since the Australian dollar began to float freely 35 years ago. . As the Fed continues to raise interest rates, and Australia will keep interest rates unchanged at a record low of 1.5%, the spread between the two countries will only widen further, and the market and economists believe that this will last at least a year.
   2 )For the Reserve Bank of Australia Governor Philip Lowe, this is a godsend gift. The Australian dollar has fallen 11% from its January high. Without the need for a central bank to cut interest rates, the depreciation of the Australian dollar helped stimulate economic growth, employment and wages, and finally realized the scenario that the central bank first envisioned a few years ago.
   3 )HSBC Australia's chief economist Paul Bloxham said that the decline in the Australian dollar is definitely helpful for the Australian economy; it is expected that the loosening effect of the devaluation of the Australian dollar in the next nine months will be equivalent to a 25 basis point rate cut. He expects the Australian dollar to fall to around 0.68 from around 0.72 in the middle of next year.