The RBA and that overvalued Aussie dollar

Over recent months, the RBA has been consistently suggesting the Aussie dollar has been overvalued, noting earlier this month that “further depreciation seems likely, particularly given the significant declines in key commodity prices”. No doubt part of The RBA ‘overvaluation’ analysis was underpinned by below trend economic growth and a general tendency for the unemployment rate to climb from around 5.75 per cent to 6.25 per cent. While the dollar may well have been overvalued (I doubt it given the 32 cent fall over recent years), the reasons for the RBA’s assessment are changing rapidly. These changes are dramatically diluting the over-valuation thesis and in the event are working to extinguish the case for any further interest rate cuts. Click here for the full article: (VIEW LINK)