RE: RBA should sell the $A to solve its problems by Dane Williams

Wednesday the Australian Financial Review published an opinion piece titled “RBA should sell the $A to solve its problems”

There’s some valid points but I can’t agree that currency intervention is the answer to some of the problems that Stevens and the RBA are facing. Have we not learned anything from the rest of the world?

There is a solution to the Reserve Bank of Australia’s current conundrum: stealthy currency intervention, which would restore much needed balance to its policy mix.

Seriously? How is that working out for the SNB right now?

The contemporary problem is that the interest rate sensitive sectors of Australia’s economy do not need any more stimulus.

Probably the most expensive and leveraged housing market in the developed world is now firmly entrenched in “bubble” territory

As I’ve said before, the RBA is always walking a fine line between trying to stimulate the broad economy while keeping housing in check.

They need the dollar to be lower to stimulate growth, but with already record low rates and a housing sector going gangbusters, Joye calls intervention a “second policy lever”.

But this time is different.

This is my favourite sentence in the article. It’s not a “second policy lever”, it’s flushing money down the toilet.

The funny thing is that this is your cliche contrarian trade idea piece. If this of all topics is actually getting a run in mainstream media, then surely the bottom is in!

Now don’t get me started on calls to peg the Aussie!

Well at least the big players can start to liquidate their shorts from $1.10…

Buy.

Dane Williams – @danewilliamsau

 

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