ANZ chief predicts Australian dollar will remain strong
"It's unlikely we'll see a huge reduction or a major reduction in the Aussie dollar's strength until there is a tapering in the US," Mr Smith said in an interview on the ABC's Inside Business program. "As the US dollar strengthens, we'll start to see the Aussie come off a bit."
The Federal Reserve decided it would press on with $US85 billion ($90 billion) in monthly bond purchases, saying last week it needed to see more evidence the US economy would continue to improve.
The central bank also said the economy was showing signs of "underlying strength".
While the Australian dollar fell to a three-year low of 88.48¢ on August 5 amid speculation the Fed would begin to taper bond purchases by year end, that sentiment reversed as a government shutdown in the US slowed growth, prompting the Australian dollar to touch an almost five-month high of 97.58¢ on October 23. It closed at 94.38¢ on Friday.
Reserve Bank governor Glenn Stevens said last week the Australian dollar "at some point in the future" would be "materially lower".
Economists in a Bloomberg survey projected that tapering in the US would begin in March, based on the median estimate.
"I don't think the tapering will happen until well into next year," Mr Smith said. "It will create some volatility. There will be adjustment."
ANZ, the country's third-largest lender by market value, had maintained its credit standards, Mr Smith said. Charges for bad debts in the past year fell 5 per cent to $1.2 billion from a year ago, and newly impaired assets in the year dropped 22 per cent, the bank said last week.
"We haven't lowered our standards," Mr Smith said.
"In fact, I think over the past few years we've maintained credit standards very well."
Frequently Asked Questions about this Article…
ANZ's chief executive, Mike Smith, believes the Australian dollar will maintain its strength as long as the US Federal Reserve continues its monthly asset purchases. This ongoing support from the US is expected to keep the Aussie dollar strong.
ANZ chief executive Mike Smith believes the Australian dollar will maintain its strength as long as the US Federal Reserve continues its monthly asset purchases. This ongoing support from the Fed helps keep the Aussie dollar strong.
The US Federal Reserve's decision to continue with its monthly bond purchases helps maintain the strength of the Australian dollar. Any tapering or reduction in these purchases could lead to a decrease in the Aussie dollar's value.
The Australian dollar might weaken if the US Federal Reserve starts tapering its bond purchases. As the US dollar strengthens, the Aussie dollar is expected to decrease in value.
Recently, the Australian dollar fell to a three-year low of 88.48¢ in August but rebounded to an almost five-month high of 97.58¢ in October, closing at 94.38¢ on a recent Friday.
The US Federal Reserve's decision to continue with $US85 billion in monthly bond purchases has supported the Australian dollar's strength. This decision is based on the need for more evidence of US economic improvement.
Economists surveyed by Bloomberg project that tapering in the US will begin in March, based on the median estimate. However, ANZ's Mike Smith believes it won't happen until well into next year.
Recently, the Australian dollar fell to a three-year low of 88.48¢ but later rose to an almost five-month high of 97.58¢. It closed at 94.38¢ last Friday, reflecting fluctuations influenced by US economic conditions.
Reserve Bank governor Glenn Stevens mentioned that the Australian dollar will be 'materially lower' at some point in the future, indicating a potential decrease in its value over time.
Economists surveyed by Bloomberg project that US tapering might begin in March. This could lead to volatility and adjustments in the Australian dollar's value, according to ANZ's Mike Smith.
ANZ has maintained its credit standards by not lowering them, as stated by Mike Smith. The bank has seen a 5% reduction in charges for bad debts and a 22% drop in newly impaired assets over the past year.
ANZ has maintained its credit standards, with charges for bad debts falling by 5% to $1.2 billion and newly impaired assets dropping by 22% over the past year. Mike Smith emphasized that the bank has not lowered its standards.
Mike Smith anticipates that when tapering begins, it will create some volatility and adjustments in the market. This suggests that investors should be prepared for potential fluctuations.
Reserve Bank governor Glenn Stevens mentioned that the Australian dollar would be 'materially lower' at some point in the future, indicating potential long-term changes in its value.
The US government shutdown slowed growth, which contributed to the Australian dollar touching an almost five-month high of 97.58¢ in October, reversing earlier sentiment of a potential decrease.
The US government shutdown slowed growth, which contributed to the Australian dollar reaching an almost five-month high. This shows how US economic events can impact the Aussie dollar's strength.
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