Incoming Australian central bank board member Kathryn Fagg, who has worked in the manufacturing, services and resource industries, said companies have accepted the need to adjust to the sustained strength of the currency.
Firms “have recognized that they can’t assume it will just revert to a much lower level,” Fagg, 51, said of the elevated local dollar in an interview by telephone yesterday from Melbourne. “So certainly most of the sectors I have seen, and the sectors I know, have actually done a lot of work in restructuring their businesses over the last few years.”
Australia’s defiance of the global slowdown is backfiring on manufacturing after the currency soared 73 percent against the U.S. dollar and 82 percent versus the yen from late October 2008. General Motors Co.’s Holden division said last week it will cut about 500 jobs in Australia, citing the Aussie’s strength and currency devaluations in competing markets. Even so, Fagg is optimistic about the nation’s position.
“We are clearly in a much more robust position and have come through the GFC in a much better way than most of the world, particularly in terms of employment levels,” she said. “We are very fortunate to be located in the Asian growth region and that continues to be very helpful to Australia.”
Fagg will be the fifth woman to serve on the 53-year-old board of the Reserve Bank of Australia when she takes up her role May 7. Treasurer Wayne Swan announced her appointment on the same day he extended Governor Glenn Stevens’s term by three years.
She brings experience from stints at Linfox, Australia’s largest privately owned logistics company, BlueScope Steel Ltd., its largest steelmaker, Australia & New Zealand Banking Group Ltd., the No. 3 bank by market value, and Esso Australia, now part of Exxon Mobil Corp.
“I have a diverse set of experiences,” she said. “I have worked across sectors from resources through manufacturing into services and I’ve done that in Australia and in Asia in particular.”
Fagg is a member of Chief Executive Women of Australia that comprises more than 270 of the nation’s leading business women, according to its website. She says that while progress has been made in the number of women on boards, there are still not enough women in senior executive roles.
Women comprise 9.2 percent of executives in the 500 biggest publicly listed companies in Australia, compared with 16.1 percent for the U.S. Fortune 500 Index, according to a government-commissioned report.
“We need to have a real focus on bringing women into executive roles,” she said. “Fifty percent of the population is women, more than half our female graduates are women and it just is wasteful that we’re not tapping into that talent and fully utilizing it.”
On monetary policy, Fagg declined to identify herself as either a hawk or dove, saying she is “very data and logic driven and would always just try to do my best in terms of what is the right balance.”
Traders priced in a 30 percent chance the central bank will lower borrowing costs by a quarter percentage point to a record 2.75 percent at the May 7 meeting, according to interest-rate swaps data compiled by Bloomberg.