Glenn Stevens’s renewed jawboning of the Aussie pushed it toward the biggest two-day drop since May as the central bank governor said investors were underestimating chances of a significant fall in the currency.
“Most measurements would say it is overvalued, and not just by a few cents,” Stevens said in the text of a speech delivered in Hobart today. “We think that investors are underestimating the likelihood of a significant fall in the Australian dollar at some point.”
The Aussie — which has traded as high as about $1.11 and as low as 77 U.S. cents in the past five years — fell 0.7 percent today, continuing a retreat from an almost eight-month high. The elevated currency has impeded efforts to stimulate non-mining areas of the economy with record-low interest rates.