30 Year Anniversary of the Floating of the Australian Dollar

Architects of the float of Australia’s dollar, trading at a similar level to when exchange controls were lifted 30 years ago, say the currency must devalue and economic reform be renewed to avert a recession.

Peter Jonson, who advised the central bank chief of the time, and Ross Garnaut, who counseled then-Prime Minister Bob Hawke, say the resource investment boom has rendered Australia uncompetitive. General Motors Co. this week cited an elevated exchange rate in deciding to stop making iconic Holden cars in the nation, as did Qantas Airways Ltd. on Dec. 5, when it flagged a record first-half loss and 1,000 job cuts — announcements that echoed the economy’s early 1980s malaise.

“There are some quite strong parallels,” said Jonson, a former head of the Reserve Bank of Australia’s research department who has observed the nation’s economy for more than 40 years. “When you look at Qantas, look at the vehicle industry, look at manufacturing generally, look at education, look at tourism, it’s a tough time.”

Bloomberg

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