RBA’s Debelle: Threats to free trade system pose "significant risk", Aussie unfazed
|The Reserve Bank of Australia (RBA) Deputy Governor Debelle is on the wires now, via Reuters, making a scheduled speech titled "A Balance of Payments" at the Economic Society of Australia Luncheon, in Canberra.
Key Headlines:
Threats to free trade system pose "significant risk".
Australia's current account deficit narrowest as share of GDP in many decades.
Mix of Australia’s foreign liabilities are not a vulnerability.
Vast bulk of Australia’s foreign debt liabilities in Australian dollars.
Large share of Australia’s foreign assets denominated in foreign currency.
This means Australia has a net foreign currency asset position.
Thus, when A$ falls the value of net foreign liabilities actually declines.
Allows A$ to play important role of shock absorber to external shocks.
Australian equity investment abroad exceeds foreign equity investment in Australia by 7% of GDP.
Compared to average net equity liability position of 10% of GDP between 1990 and 2010.
Shift reflects investment in foreign equity by Australian superannuation industry.
The Aussie was uninspired by the comments from Debelle, as he offered no fresh insights on the RBA's monetary policy outlook. The AUD/USD pair keeps the red near daily lows of 0.6764, down -0.10% on the day.
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