ANZ chief executive Mike Smith said he expects the Australian dollar to maintain its strength as long as the US Federal Reserve keeps up monthly asset purchases.
“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.