Some “68% of foreign liabilities are denominated in Australian dollars, this increases to 85% after hedging,” Debelle said. “The fact that the liabilities are effectively denominated in Australian dollars, while the assets are in foreign currency, does not impede the exchange rate adjustment. If anything, it actually helps the adjustment.”
Debelle was also asked whether, based on the weakening currency and expectations of further interest-rate cuts, the Aussie dollar could fall back down to around 50 U.S. cents from current levels just below 70 cents.
“The currency’s come down some, it may well go down further, depends partly what others do as well,” he said. “The depreciation of the currency we’ve seen has been helpful for the macroeconomic outlook and if it would depreciate further that would also be helpful” in terms of economic growth and inflation.
“Whether it gets down as far as 50, I don’t know,” he said. “The best predictor of where the exchange rate is going to be tomorrow is where it is today.”
This article provided by Bloomberg News.