Monday 18 February 2013

Fighting the currency war with a "preashooter"


Aussie Dollar the most overvalued currency says Fairfax
...The Australian dollar is the most overvalued currency in the world, but there is little will to intervene, according to a global valuation.
Using data from the OECD's measure of purchasing power parityThe Economist's Big Mac Index and the Current Real Effective Exchange Rate (REER) as compared to its five-year average, HSBC found that Australia had the world's most overvalued currency, while having policymakers who were among the least active in the so-called ''currency war''.
''We just don't want to take that kind of risks. We are a small country,'' Mr English added. ''We'll be out in the war zone with a peashooter.''
Reserve Bank of Australia governor Glenn Stevens briefly mentioned the Australian dollar in his statement following the central bank's decision to hold interest rates at 3 per cent for this month, writing that ''the exchange rate remains higher than might have been expected''.(here)

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