Strong Australia Dollar Imposes Burden on Economy, Swan Says
Australia's Treasurer Wayne Swan
Eric Taylor/Bloomberg
Wayne Swan, Australia's treasurer, seen here in earlier this year, said today, “We have a floating exchange rate which we are committed to and we want to see market mechanisms in place internationally.”
Wayne Swan, Australia's treasurer, seen here in earlier this year, said today, “We have a floating exchange rate which we are committed to and we want to see market mechanisms in place internationally.” Photographer: Eric Taylor/Bloomberg
Treasurer Wayne Swan said the appreciation of Australia’s currency was a burden on parts of the nation’s economy, echoing comments made by Prime Minister Julia Gillard last month.
“A higher currency for Australia means that it has an impact on many of our export industries such as tourism and the export of educational services and those types of industries,” Swan said in an interview in Canberra today. “There is no doubt that it is a burden for some of those industries.”
The so-called Aussie has risen 13 percent over the past year to $1.051 as of 5:10 p.m. in Sydney, the third-best performer among the 16 major currencies tracked by Bloomberg. The currency reached $1.0584 on April 8, the strongest since exchange controls were removed in 1983.
Swan heads to the U.S. to attend meetings of the World Bank, International Monetary Fund and Group of 20. He said currencies would be discussed as part of addressing so-called global financial imbalances.
“We have a floating exchange rate which we are committed to and we want to see market mechanisms in place internationally,” Swan, 56, said. “That is an important part of the discussion at the G-20 and IMF about how we reduce global financial imbalances.”
Bond Market
Swan, asked about imposing a minimum on bond issuance as the budget moves into surplus in 2012-13, said Australia’s Council of Financial Regulators is considering the future of the debt market.
“I am in the process of consulting with them now about what their views are about the future of the bond market,” Swan said.
Australia had the second-lowest debt among Organization for Economic Cooperation and Development members at 8.1 percent of gross domestic product in 2009 and there are currently A$171.7 billion ($179 billion) in bonds outstanding.
Australia’s GDP will increase 3 percent in 2011, half a percentage point lower than an October estimate, the International Monetary Fund said in its semi-annual World Economic Outlook released this week.
“I’ll be highlighting the financial strengths and underpinnings of the Australian economy and the very bright prospects we have,” Swan said. “Australia is a great place to invest and you can see that in the very strong investment pipeline currently in place.”
Australia’s central bank paused interest-rate increases this year to allow Queensland state to recover from torrential rains and storms. In contrast, policy makers from Beijing to Frankfurt are trying to stamp out inflation with higher rates.
To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net
To contact the editor responsible for this story: Peter Hirschberg at phirschberg@bloomberg.net
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