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USD / CNY jumped to the highest since February 2008 @ Forex Factory



From rba.gov.au | 4 hours ago

When I started my working life here in Canberra in the Treasury just over 30 years ago, one of the most prominent macroeconomic issues was the current account deficit. Heated discussions took place about twin deficits, banana republics, consenting adults and whether the operating account should be a target for monetary policy or not. [1

] Early in my Treasury career, between my 2XX radio shows, I worked in the Balance of Payments section. There was a whole unit devoted to analyzing and predicting the current account deficit, given its prominent role in the economic and political debate. Today, three decades back and forth in Canberra, I will again focus on the current account balance and Australia's external position. But the rationale for doing so today is quite different from the one in the 1980s. Today, the current account deficit is the smallest it has been as a share of the economy since the 1970s, and the trade surplus is about the largest it has been since the 1950s. Payment is the closest to being in balance for decades! As a result, Australia's net foreign liabilities, that is, how much we owe foreigners less how much foreigners owe us, have been at their lowest as a share of GDP since the beginning of the 2000s. [2] And the composition of these obligations has changed quite considerably. It is markedly different from that in the 1980s. In the 1980s, foreign liabilities were often seen as a significant vulnerability to the Australian economy. I think this risk was overstated. Commitments were predominantly in Australian dollars, which meant that the exchange rate could still work very effectively tweet at 9:51 pm: RBA Deputy Guy Debelle: Threats to global trade are a risk to Australia, the world. #AUD plays an important role as a shock absorber, Australia is a big advantage for the global trading system #AUDUSD -BBG


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