Exchange Rates (HSC SSCE Economics): Flashcards
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Type of exchange rate system in Australia
Type of exchange rate system in Australia
Floating exchange rate system
What is 'dirtying the float'?
What is 'dirtying the float'?
RBA directly buying/selling A$ in forex market
RBA action to prevent A$ depreciation
RBA action to prevent A$ depreciation
Purchase Australian dollars
RBA action to prevent A$ appreciation
RBA action to prevent A$ appreciation
Sell Australian dollars
A$ value loss in 2007-08 crisis
A$ value loss in 2007-08 crisis
One-third (33%) against US dollar
Main limitation of RBA direct intervention
Main limitation of RBA direct intervention
Reserves less than one day's forex market turnover
Primary target of RBA monetary policy
Primary target of RBA monetary policy
Domestic economic objectives (inflation control)
Inflation impact of 10% A$ depreciation (2 years)
Inflation impact of 10% A$ depreciation (2 years)
0.25-0.5% increase in inflation
Effect of higher interest rates on A$
Effect of higher interest rates on A$
Appreciation (attracts foreign capital)
Two main RBA intervention strategies
Two main RBA intervention strategies
Direct (dirtying float) and indirect (monetary policy)