MARKETS SPECTATOR: Clyne's dollar doubts

National Australia Bank's chief executive says the Reserve Bank cannot unilaterally influence the direction of the Australian dollar.

Cameron Clyne says the Reserve Bank’s “capacity to influence” the direction of the Australian dollar is "limited" as a complicated confluence of factors, not just the Reserve Bank's cash rate, determines the value of the currency.

The NAB chief executive says the economic outlook gives the central bank “room” to cut its benchmark rate, which is now at 2.75 per cent after it was cut on Tuesday. Inflation is benign, unemployment will probably settle at 5.5 per cent this year and the economic environment is “patchy”, he says.

“It’s a 10-speed economy,” Clyne told reporters at a news conference today.

He declined to comment on government policy except to say that “business likes certainty” with regard to economic policy. There are “half a dozen things” that are impacting business confidence, according to Clyne, including government policy, Europe’s deep recession and a slowdown in the Chinese economy. 

Rio Tinto chief executive Sam Walsh was unsparing in his demands of the Gillard government.

“Stable fiscal and regulatory frameworks provide the foundation for investing in, and operating, long life, capital intensive assets,” Walsh told Rio’s AGM. “I expect an Australian government to see it in the nation’s best interest to maintain business-friendly investment policies, thus ensuring that Australia maintains its competitive position.”

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