ANZ chief predicts 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.
“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 in monthly bond purchases, saying last week that it needs to see more evidence the US economy will continue to improve.
The central bank also said that the economy is showing signs of “underlying strength”.
While the Australian dollar fell to a three-year low of US88.48¢ on August 5 amid speculation the Fed would begin to taper bond purchases by year end, that sentiment reversed as a US government shutdown slowed growth, prompting the Australian dollar to touch an almost five-month high of US97.58¢ on October 23.
The Aussie closed at US94.38¢ 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 expect that tapering in the US will begin in March.
“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.
Frequently Asked Questions about this Article…
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 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 is expected to keep the Aussie dollar strong.
The US Federal Reserve's decision to continue its $US85 billion monthly bond purchases plays a significant role in maintaining the strength of the Australian dollar. Any changes in these actions, such as tapering, could lead to a decrease in the Aussie dollar's strength.
The US Federal Reserve's decision to continue with its $85 billion monthly bond purchases plays a significant role in maintaining the strength of the Australian dollar. Any changes in these actions, such as tapering, could lead to a reduction in the Aussie dollar's strength.
Recently, the Australian dollar fell to a three-year low of US88.48¢ in August but rebounded to an almost five-month high of US97.58¢ in October. It closed at US94.38¢ on a recent Friday.
The US government shutdown slowed economic growth, which reversed the sentiment of a potential tapering by the Fed. This led to the Australian dollar reaching an almost five-month high of US97.58¢ on October 23.
Economists surveyed by Bloomberg expect that tapering in the US will begin in March. However, ANZ's Mike Smith believes it might not happen until well into next year, which could create some market volatility.
Economists surveyed by Bloomberg expect that tapering in the US will begin in March. However, ANZ's Mike Smith believes it won't happen until well into next year, which could create some volatility and adjustments in the market.
Reserve Bank governor Glenn Stevens mentioned that at some point in the future, the Australian dollar would be 'materially lower.' This suggests a potential decrease in the Aussie dollar's value over time.
Reserve Bank governor Glenn Stevens mentioned that the Australian dollar would be 'materially lower' at some point in the future, indicating a potential decrease in its value over time.
The US economy's performance, particularly the actions of the Federal Reserve, significantly impacts the Australian dollar. As the US dollar strengthens, the Australian dollar may weaken slightly.
In August, speculation that the Fed would begin tapering bond purchases by the year-end caused the Australian dollar to fall to a three-year low of US88.48¢. This highlights the sensitivity of the Aussie dollar to US monetary policy expectations.
A decrease in the Australian dollar's strength could occur if the US Federal Reserve begins tapering its bond purchases, as this would likely strengthen the US dollar and reduce the Aussie dollar's value.
As of the article's publication, the Australian dollar closed at US94.38¢ on Friday, reflecting its ongoing strength amidst the US Federal Reserve's continued asset purchases.
ANZ, being the country's third-largest lender by market value, maintains its financial stability by upholding its credit standards, as stated by Mike Smith.
ANZ, being the country's third-largest lender by market value, maintains its financial stability by upholding its credit standards, as stated by Mike Smith. This approach helps the bank navigate through currency fluctuations and market volatility.
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