The country’s central bank chief has warned trying to stimulate the economy by devaluing the Australian dollar would be both costly and risky.
The currency sits at about 71 US cents, which Reserve Bank governor Philip Lowe believes is a fair value in the current economic climate.
“When it is at its fair value it is going to be very hard to shift on a sustained basis. I don’t think it is a successful strategy,” Dr Lowe told a parliamentary hearing on Friday.
He said the Australian dollar was one of the most actively traded currencies in the world.
“So for the central bank to go and influence a price away from its fair value in a very deep and liquid market, we would need huge amounts of foreign exchange intervention,” Dr Lowe said.
“It’s going to be very hard to keep the currency away from its fair fundamental value for a long period of time. I’m not optimistic that we could do it.”