RBA Bulletin: Decline in terms of trade and easy monetary policy led to depreciation of the AUD

The Reserve Bank of Australia (RBA), in its latest bulletin, mentioned in detail about the Australian dollar FX rate, with the key takeaways found below:

“The exchange rate is influenced by a number of domestic and international factors.” 

“Two key fundamental determinants of the exchange rate are the terms of trade and differences between interest rates in Australia and those in major advanced economies.“

“Since the end of the mining boom, the decline in the terms of trade and easing in domestic monetary policy, including the recent introduction of quantitative easing measures, have contributed to the depreciation of the Australian dollar. “

“On a shorter-term basis the Australian dollar has also moved closely with prices in other international financial markets in response to changes in global risk sentiment.”

more to come ....