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20 May 2014
RBA's Debelle: Reduced capital inflows could result in further decline in the Aussie
FXStreet (Bali) - RBA's Assistant Governor (Financial Markets) Debelle, in a speech to the Financial Services Institute of Australia, in Adelaide, said that reduced capital inflows could result in further decline in the Australian dollar.
Reuters reports on the main takeaways from Debelle's speech:
Debelle said that "capital flows into Australia are likely to slow as the mining investment boom that is largely foreign funded fades, and this could see a further decline in the Australian dollar."
Debelle, also noted that "foreign demand for Australian government bonds may not increase much from here, while local banks were likely to remain less reliant on offshore debt markets for funding."
"One might expect to see reduced capital inflows in the period ahead, with the possibility of a consequent further decline in the Australian dollar."
Debelle also told the audience that "this would help in achieving balanced growth in the economy", although making a case for "Japanese investors being a source of potential additional demand for Australian assets."
"While there is limited evidence to date that the programme of quantitative easing in Japan has encouraged investors to substantially increase their purchases of other countries' assets, the most recent data suggest that demand for Australian debt from Japanese investors has started to pick up," Debelle said.
"Notwithstanding the possibility of these flows from Japan, the net implication of these developments is that one might expect to see reduced capital inflows in the period ahead, with the possibility of a consequent further decline in the Australian dollar", Debelle added.
Reuters reports on the main takeaways from Debelle's speech:
Debelle said that "capital flows into Australia are likely to slow as the mining investment boom that is largely foreign funded fades, and this could see a further decline in the Australian dollar."
Debelle, also noted that "foreign demand for Australian government bonds may not increase much from here, while local banks were likely to remain less reliant on offshore debt markets for funding."
"One might expect to see reduced capital inflows in the period ahead, with the possibility of a consequent further decline in the Australian dollar."
Debelle also told the audience that "this would help in achieving balanced growth in the economy", although making a case for "Japanese investors being a source of potential additional demand for Australian assets."
"While there is limited evidence to date that the programme of quantitative easing in Japan has encouraged investors to substantially increase their purchases of other countries' assets, the most recent data suggest that demand for Australian debt from Japanese investors has started to pick up," Debelle said.
"Notwithstanding the possibility of these flows from Japan, the net implication of these developments is that one might expect to see reduced capital inflows in the period ahead, with the possibility of a consequent further decline in the Australian dollar", Debelle added.