Investors are under-estimating the probability of a “significant fall” in the Australian dollar, Reserve Bank Governor Glenn Stevens said.
“Most measurements would say it is overvalued, and not just by a few cents,” Stevens said in the text of a speech to be delivered in Hobart today. “We think that investors are under-estimating the likelihood of a significant fall in the Australian dollar at some point.”
The Aussie dollar has climbed 5.8 percent this year and reached an almost eight-month high this week after the Reserve Bank of Australia kept its benchmark cash rate at a record low 2.5 percent for an 11th month. Stevens today reiterated that the currency remained high by historical standards and said it was “uncomfortable” for sectors exposed to trade.
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