The Australian dollar slumped today after the Australian Treasury voiced concern about the strength of the currency and signaled that the central bank may ease its monetary policy further in order to contain the Aussie’s appreciation.
The Treasury said:
If the high exchange rate is judged to be inconsistent with keeping the economy close to non-inflationary full employment, we could expect that monetary policy would be eased in response, putting downward pressure on the AUD.
However, the conclusion was:
Calls for Australia to shift away from its long-standing policy approach and take action directed at lowering the value of the AUD are misplaced.
The Reserve Bank of Australia has kept its main interest rate at 3.5 percent on its last policy meeting.
AUD/USD dropped from 1.0512 to 1.0444 and AUD/JPY declined from 83.37 to 82.85 as of 11:51 GMT today.
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