An extended note from Luci Ellis, Chief Economist Westpac Group, Westpac.
In brief:
- A depreciating exchange rate sometimes gets interpreted as a ‘vote of no confidence’ in that economy or currency. In fact, it is often a necessary and welcome shock absorber.
- future growth in export volumes is mostly going to have to come from somewhere other than the current top four exports.
- Australia is going to need to pivot.
- The good news is that history shows that it can, and the behaviour of the exchange rate will help it navigate that period of change.
**
While the note doesn't provide a forecast for the AUD it reads to me like WPAC is expecting the currency to be lower for longer.
