Colin Brinsden, AAP Economics and Business Correspondent
(Australian Associated Press)
The Reserve Bank believes the Australian dollar remains close to fair value, despite rising against the US dollar in recent weeks.
Central bank assistant governor for financial markets Christopher Kent told a forum on Tuesday the recent rise above 73 US cents was more tied to positive news on a COVID-19 vaccine front rather than the outcome of US presidential election.
“It’s still, I think, pretty close to its fundamental value,” Dr Kent told the Australian Securitisation Forum virtual symposium on Tuesday.
“It should be noted, of course, that any response to the positive announcements on the vaccine … are a good thing for the global economy including for the Australian economy.”
Last week, pharmaceutical giant Pfizer said it was successfully developing a vaccine, which has a 90 per cent effectiveness.
On Monday, rival Moderna said trials of its vaccine showed a 95 per cent efficacy.
The Aussie dollar had been in decline from the end of August on speculation of further monetary policy easing by the Reserve Bank, hitting a low of around 70 US cents.
The central bank did eventually cut the rates on its key measures to a record low 0.1 per cent at its November board meeting, while entering into a $100 billion bond buying program known as quantitative easing.
Dr Kent reiterated the Reserve Bank’s stance on negative interest rates, saying they are “extraordinarily unlikely”.