Westpac on the Australia dollar: "The exchange rate and the big pivot"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.
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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.
This article was written by Eamonn Sheridan at www.forexlive.com.
Source: Westpac on the Australia dollar: "The exchange rate and the big pivot" (https://www.forexlive.com/news/westpac-on-the-australia-dollar-the-exchange-rate-and-the-big-pivot-20250116/)
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