Aussie dollar to fall materially: RBA

[CityFarmer]

It will cause a dent on the PnL, for those companies have substantial exposure in Aussie dollar, e.g. SingTel.

Aussie dollar to fall materially: RBA

SYDNEY — Australia’s central bank Governor Glenn Stevens said yesterday that the Australian dollar was overvalued and would likely fall “materially” in the future, a shift that would be welcomed by trade-exposed sectors of the domestic economy.

Speaking at an investment conference yesterday, Mr Stevens made pointed remarks about the nation’s housing market, commodity exports and the United States Federal Reserve’s tapering, which some economists read as meant to incite a sell-off in Australian dollar holdings.

The recent rise in the Australian dollar was from levels that were already “unusually high”, he said.

“These levels of the exchange rate are not supported by Australia’s relative levels of costs and productivity,” Mr Stevens said.

“Moreover, the terms of trade are likely to fall, not rise, from here. So, it seems quite likely that, at some point in the future, the Australian dollar will be materially lower than it is today,” he added.

The comments immediately put a dent in the currency. The Australian dollar was trading around US$0.9511 late yesterday, compared with US$0.9606 late on Monday.
...
http://www.todayonline.com/business/auss...rially-rba

[NTL]

If the inflation goes up, then the effect may be lesser with a higher revenue?

[Ben]

It will cause a dent on the PnL, for those companies have substantial exposure in Aussie dollar, e.g. SingTel.

Aussie dollar to fall materially: RBA

SYDNEY — Australia’s central bank Governor Glenn Stevens said yesterday that the Australian dollar was overvalued and would likely fall “materially” in the future, a shift that would be welcomed by trade-exposed sectors of the domestic economy.

Speaking at an investment conference yesterday, Mr Stevens made pointed remarks about the nation’s housing market, commodity exports and the United States Federal Reserve’s tapering, which some economists read as meant to incite a sell-off in Australian dollar holdings.

The recent rise in the Australian dollar was from levels that were already “unusually high”, he said.

“These levels of the exchange rate are not supported by Australia’s relative levels of costs and productivity,” Mr Stevens said.

“Moreover, the terms of trade are likely to fall, not rise, from here. So, it seems quite likely that, at some point in the future, the Australian dollar will be materially lower than it is today,” he added.

The comments immediately put a dent in the currency. The Australian dollar was trading around US$0.9511 late yesterday, compared with US$0.9606 late on Monday.
...
http://www.todayonline.com/business/auss...rially-rba

Australia economy is highly dependent on mining, and mining is not doing well at the moment. Both Caterpillar and Cummins reported disappointed earnings that missed expectation, citing weak demand in mining sector as one of the major factor. So I guess A$ is going to weaken going forward.