An interesting article from one the better Australian economics journalists around …
Michael Pascoe (of the Sydney Morning Herald) says that the RBA is selectively using dates and statistics to tell the story it wants to tell on the Australian dollar …RBA telling its own Australian dollar story
He reminds us that the RBA view that the A$ “hasn’t weakened as much as it seems and therefore has further to fall” … but “as is so often the case with figures, a lot depends on the time frame you might choose to use to spin your angle.”
The bolding below is mine.
Pascoe says;
- Agrees the AUD has fallen more against the greenback recently than it has against the trade-weighted index
- But the Aussie didn’t rise by as much on the TWI as it did against the US dollar in the first place
He picks March 2007, “when the global financial crisis was still a way off and Australia seemed a very happy place” as a starting point:
- AUD was at 64 on the TWI and bought US78¢
- From those March 2007 levels, the $A/$US rate and the TWI rose, plunged and rallied again to hit highs on May 2, 2011 of $US1.0939 and 79.2, RBA statistical records show. For the percentage inclined, they were gains of 40 and 24 per cent respectively. From those peaks, the Aussie is down 28.5 per cent now on the greenback and “only” 19 per cent on the TWI
But:
- The Australian dollar, according to the RBA website at the close of business on Wednesday, is worth US78.2¢ and 63.9 on the TWI. Which is pretty much where both counts were eight years ago, before the Aussie took off
He goes on:
- Back in March, 2007, iron ore was worth US$36.63 a tonne
- The Platts Fe 62 % index was US$62 yesterday, plus we’re shipping vastly greater quantities of the stuff
And:
- Australian thermal coal averaged US$59.34 a tonne in March 2007, compared with US$59.80 for Newcastle yesterday
- Coking coal was US$91.81 a tonne in the 2007 March quarter. It was FOB Queensland for a bit over US$110 yesterday
- Australian terms of trade? … On the last available figures, they’re nearly 5 points higher now than they were at the start of 2007, albeit the expectation back then was for strength and now it’s for weakness.
–
Hmmm.
Thoughts welcome in the comments, as always.
(And ps. I’ll have a bit more on the AUD to come real soon … one of the banks out there thinks the AUD downtrend is close to an end …)
